Discussion Paper No. 15
November 3, 2021
Meta-Search and Market Concentration
Author:
Abstract:
Competing intermediaries search on behalf of consumers among a large number of hor- izontally differentiated sellers. Consumers either pick the best deal offered by a random in- termediary, or compare the intermediaries. A higher number of deal finders has the direct effect of decreasing their search effort, but also increases the incentives for consumers to be- come informed. A higher share of informed consumers in turns increases the search effort of deal finders, so that the sign of the total effect is ambiguous. If the total effect of lower concentration is to increase search effort, it always decreases the price offered by sellers.
Keywords:
JEL-Classification:
Download:
Discussion Paper No. 14
Gender Differences in Tournament Choices: Risk Preferences, Overconfidence or Competitiveness?
Author:
Abstract:
A large number of recent experimental studies show that women are less likely to sort into competitive environments. While part of this effect may be explained by gender differences in risk attitudes and overconfidence, previous studies have attributed the majority of the gender gap to gender differences in a separate ‘competitiveness’ trait. We re-examine this result using a novel experimental technique that allows us to separate competitiveness from alternative explanations by experimental design. In contrast to the literature, our results imply that the whole gender gap is driven by risk attitudes and overconfidence, which has important implications for future research.
Keywords:
JEL-Classification:
Download:
Discussion Paper No. 13
Measuring Applicant Quality to Detect Discrimination In Peer-to-Peer Lending
Author:
Abstract:
We measure the quality of applications for online peer-to-peer lend- ing in Germany and relate it to gender discrimination. The data context allows summarizing application quality as a single numeric measure, the expected internal rate of return. The measure serves as a control variable and is interacted with the applicants’ gender. We find that women enjoy higher funding rates than men, mainly be- cause they are less punished when they offer a low application qual- ity. The evidence is consistent with the hypothesis that the predom- inantly male lenders have a less precise understanding of women’s applications than of men’s applications.
Keywords:
gender discrimination; household finance; irrational beliefs;
JEL-Classification:
Download:
Discussion Paper No. 12
Auction versus Negotiations
Author:
Abstract:
For the procurement of complex goods the early exchange of informa- tion is important to avoid costly renegotiation. If the buyer can specify the main characteristics of possible design improvements in a complete contingent contract, a scoring auction implements the efficient allocation. If this is not feasible, the buyer must choose between a price-only auction (discouraging early information exchange) and bilateral negotiations with a preselected seller (reducing compe- tition). Bilateral negotiations are superior if potential design improvements are important, if renegotiation is particularly costly, and if the buyer’s bargaining position is strong. Moreover, negotiations provide stronger incentives for sellers to investigate design improvements.
Keywords:
adaption costs; auctions; behavioral contract theory; loss aversion; negotiations; procurement; renegotiation;
JEL-Classification:
Download:
Discussion Paper No. 11
The Power of Sunspots: an Experimental Analysis
Author:
Abstract:
This paper presents an experiment on a coordination game with extrinsic random signals, in which we systematically vary the stochastic process generating these signals and measure how signals affect be- havior. We find that sunspot equilibria emerge naturally if there are salient public signals. However, highly correlated private signals can also lead to sunspot-driven behavior, even when this is not an equi- librium. Private signals reduce the power of public signals as sunspot variables. The higher the correla- tion of extrinsic signals and the more easily they can be aggregated, the more powerful these signals are in distracting actions from the action that minimizes strategic uncertainty.
Keywords:
coordination games; strategic uncertainty; sunspot equilibria; forward guidance; expectations;
JEL-Classification:
Download:
Discussion Paper No. 21
A Framework for Separating Individual Treatment Effects From Spillover, Interaction and General Equilibrium Effects
Author:
Abstract:
This paper suggests a causal framework for disentangling individual level treatment effects and interference effects, i.e., general equilibrium, spillover, or interaction effects related to treatment distribution. Thus, the framework allows for a relaxation of the Stable Unit Treatment Value Assumption (SUTVA), which assumes away any form of treatment-dependent interference between study participants. Instead, we permit interference effects within aggregate units, for example, regions or local labor markets, but need to rule out interference effects between these aggregate units. Borrowing notation from the causal mediation literature, we define a range of policy-relevant effects and formally discuss identification based on randomization, selection on observables, and difference-in-differences. We also present an application to a policy intervention extending unemployment benefit durations in selected regions of Austria that arguably affected ineligibles in treated regions through general equilibrium effects in local labor markets.
Keywords:
treatment effect; general equilibrium effects; spillover effects; interaction effects; interference effects; inverse probability weighting; propensity score; mediation analysis; difference-in-differences;
JEL-Classification:
Download:
Discussion Paper No. 22
Mean Field Games with Singular Controls
Author:
Abstract:
This paper establishes the existence of relaxed solutions to mean field games (MFGs for short) with singular controls. As a by-product, we obtain an existence of relaxed solutions results for McKean-Vlasov stochastic singular control problems. Finally, we prove approximations of solutions results for a particular class of MFGs with singular controls by solutions, respectively control rules, for MFGs with purely regular controls. Our existence and approximation results strongly hinge on the use of the Skorokhod M1 topology on the space of càdlàg functions.
Keywords:
mean field game; singular control; relaxed control; Skorokhod M1 topology;
JEL-Classification:
Download:
Discussion Paper No. 23
Cooperating Over Losses and Competing Over Gains: a Social Dilemma Experiment
Author:
Abstract:
Evidence from studies in international relations, the politics of reform, collective action and price competition suggests that economic agents in social dilemma situations cooperate more to avoid losses than in the pursuit of gains. To test whether the prospect of losses can induce cooperation, we let experimental subjects play the traveler’s dilemma in the gain and loss domain. Subjects cooperate substantially more over losses. Furthermore, our results suggest that this treatment effect is best explained by reference-dependent risk preferences and reference-dependent strategic sophistication. We discuss the implications of our results and relate our findings to other experimental games played in the loss domain.
Keywords:
traveler's dilemma; loss domain; diminishing sensitivity; strategic sophistication;
JEL-Classification:
Download:
Discussion Paper No. 25
Deception and Self-Deception
Author:
Abstract:
Why are people so often overconfident? We conduct an experiment to test the hypothesis that people become overconfident to more effectively persuade or deceive others. After performing a cognitively challenging task, half of our subjects are informed that they can earn money by convincing others of their superior performance. The privately elicited beliefs of informed subjects are significantly more confident than the beliefs of subjects in the control condition. By generating exogenous variation in confidence with a noisy performance signal, we are also able to show that higher confidence indeed makes subjects more persuasive in the subsequent face-to-face interactions.
Keywords:
overconfidence; self-deception; motivated cognition; persuasion; deception;
JEL-Classification:
Download:
Discussion Paper No. 24
Sequential versus Static Screening: an Equivalence Result
Author:
Abstract:
We show that every sequential screening model is equivalent to a standard text book static screening model. We use this result and apply well-established techniques from static screen- ing to obtain solutions for classes of sequential screening models for which standard sequen- tial screening techniques are not applicable. Moreover, we identify the counterparts of well– understood features of the static screening model in the corresponding sequential screening model such as the single-crossing condition and conditions that imply the optimality of deter- ministic schedules.
Keywords:
sequential screening; static screening; stochastic mechanisms;
JEL-Classification: