Discussion Paper No. 586
September 23, 2026
The Stories We Tell: Societal Narratives and Support for the Far Right
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Abstract:
In two studies using AI-assisted qualitative interviews, we ask a representative sample of the German electorate (N = 1, 013) to reflect on the most important societal events of the last 15 years. We document that far-right supporters construct systematically different narratives about the recent past. First, they recall different events—with a strong focus on migration-related issues. Second, even when they do consider the same events, they are more likely to blame the establishment and describe events more negatively and with greater emotional intensity. We further document that these narratives are associated with policy preferences, and that far right supporters are more inclined than supporters of other parties to prioritize cultural over economic issues. Together, our findings reveal that partisan divides extend to how citizens remember and interpret shared national experiences.
Keywords:
polarization; narratives; ai-assisted qualitative interviews; explanations; mental models;
JEL-Classification:
D01; C90; D84;
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Discussion Paper No. 585
September 9, 2026
The Supply-Side Effect of Immigration on Prices: Evidence from Nursing Homes
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Abstract:
We study how immigration affects prices through changes in labor supply. Using policy-driven increases in immigration to Germany and administrative data covering the universe of nursing homes, we find that one additional foreign-born woman per 100 residents reduces nursing-home care prices by 2.6 percent. The price effects are concentrated in more competitive markets. Examining potential mechanisms, we find that immigration lowers labor costs as nursing homes shift toward lower-paid foreign-born workers. We find no evidence of declines in inspection-based measures of quality or of scale effects. Finally, immigration increases the use of informal care, potentially strengthening competitive pressure from the broader care market.
Keywords:
immigration; labor supply; prices; nursing homes;
JEL-Classification:
J61; F22; J30;
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Discussion Paper No. 560
Januar 26, 2026
Quantile Selection in the Gender Pay Gap
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Abstract:
We propose a new approach to estimate selection-corrected quantiles of the gender wage gap. Our method employs instrumental variables that explain variation in the latent variable but, conditional on the latent process, do not directly affect selection. We provide semiparametric identification of the quantile parameters without imposing parametric restrictions on the selection probability, derive the asymptotic distribution of the proposed estimator based on constrained selection probability weighting, and demonstrate how the approach applies to the Roy model of labor supply. Using German administrative data, we analyze the distribution of the gender gap in full-time earnings. We find pronounced positive selection among women at the lower end, especially those with less education, which widens the gender gap in this segment, and strong positive selection among highly educated men at the top, which narrows the gender wage gap at upper quantiles.
Keywords:
quantile regression; sample selection; roy model; rank invariance; semiparametric inference; gender wage gap; wage inequality;
JEL-Classification:
C14; C31; C36; J16; J21; J31;
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Discussion Paper No. 541
Juli 31, 2025
Monetizing Digital Content with Network Effects
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Abstract:
We design profit-maximizing mechanisms to sell an excludable and non-rival good with positive and/or negative network effects. Buyers have heterogeneous private values that depend on how many others also consume the good. In optimum, an endogenous number of the highest types consume the good, and we can implement this allocation in dominant strategies. We apply our insights to digital content creation, and we are able to rationalize features seen in monetization schemes in this industry such as voluntary contributions, community subsidies, and exclusivity bids.
Keywords:
mechanism design; non-rival goods; club goods; network effects; digital content; creator economy;
JEL-Classification:
D82;
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Discussion Paper No. 539
Juli 28, 2025
Measuring Long-Run Expectations that Correlate with Investment Decisions
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Abstract:
Different methods of eliciting long-run expectations yield data that predict economic choices differently well. We ask members of a wide population sample to make a 10-year investment decision and to forecast stock market returns in one of two formats: they either predict the average of annual growth rates over the next 10 years, or they predict the total, cumulative growth that occurs over the 10-year period. Results show that total 10-year forecasts are more pessimistic than average annual forecasts, but they better predict experimental portfolio choices and real-world stock market participation.
Keywords:
household finance; long-run predictions; survey experiments;
JEL-Classification:
D01; D14; D84; D9;
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Discussion Paper No. 504
Mai 23, 2024
Principled Mechanism Design with Evidence
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Abstract:
We cast mechanism design with evidence in the framework of Myerson (1982), whereby his generalized revelation principle directly applies and yields standard notions of incentive compatible direct mechanisms. Their specific nature depends on whether the agent's (verifiable) presentation of evidence is contractually controllable, however. For deterministic implementation, we show that, in general, such control has value, and we offer two independent conditions under which this value vanishes, one on evidence (WET) and another on preferences (TIWO). Allowing for fully stochastic mechanisms, we also show how randomization generally has value and clarify to what extent this value vanishes under the common assumption of evidentiary normality (NOR). While, in general, the value of control extends to stochastic implementation, neither control nor randomization have any value if NOR holds together with WET or TIWO.
Keywords:
mechanism design; revelation principle; evidence; verifiable information; value of control; value of randomization;
JEL-Classification:
D82;
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Discussion Paper No. 479
Dezember 13, 2023
Do We Talk Too Much?
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Abstract:
We consider the trade-off between talking and listening in a laboratory experiment where two team members need to coordinate on the use of an information channel. Each team member indicates their preference to “talk” and share her own information with her teammate, or to “listen” and obtain knowledge of the teammate’s information. The nature of the information varies across treatments. For stylized urns-and-balls treatments, we formalize a version of the “hard-easy effect” of over- and under-confidence: players talk more in situations where information is relatively precise – not only for the talker but also for the listener. Indeed we find that a more precise information structure induces a higher talking frequency, with a difference of 5 percentage points, relative to a baseline of 48 percent. The game-theoretic equilibrium, with rational expectations, predicts no such treatment effect. In treatments where information arises from real-world contexts, the hard-easy effect on the talking frequency is even stronger, at about 13 percentage points, relative to a baseline of about 38 percent.
Keywords:
JEL-Classification:
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Discussion Paper No. 478
Public Appeals and Collective Crisis Mitigation
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Abstract:
Arrivals of crises often trigger public appeals by policy leaders, attempting to motivate crisis-mitigating behaviors. We run a controlled experiment among a general-population sample to investigate the impact of such appeals and of their tonality. Varying the language, an identical content of the appeal—a plea to contribute to mitigating a crisis—is formulated with either positive or negative wordings. Relative to the case with no appeal, both types of appeals successfully raise contributions, each by about 20 percent. A separate sample of policy-makers is presented with our design and asked to estimate the effect of the appeals. They correctly predict the effect of the positively worded appeal but fail to predict the effect of the negatively worded one.
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JEL-Classification:
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Discussion Paper No. 477
Attempting to Detect a Lie: Do We Think it Through?
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Abstract:
Game-theoretic analyses of communication rely on beliefs – especially, the receiver’s belief about the truth status of an utterance and the sender’s belief about the reaction to the utterance – but research that provides measurements of such beliefs is still in its infancy. Our experiment examines the use of second-order beliefs, measuring belief hierarchies regarding a message that may be a lie. In a two-player communication game between a sender and a receiver, the sender knows the state of the world and has a transparent incentive to deceive the receiver. The receiver chooses a binary reaction. For a wide set of non-equilibrium beliefs, the reaction and the receiver’s second-order belief should dissonate: she should follow the sender’s statement if and only if she believes that the sender believes that she does not follow the statement. The opposite is true empirically, constituting a new pattern of inconsistency between actions and beliefs.
Keywords:
strategic information transmission; lying; higher-order beliefs;
JEL-Classification:
D01; D83;
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Discussion Paper No. 463
November 24, 2023
Robust Decision-Making under Risk and Ambiguity
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Abstract:
Economists often estimate economic models on data and use the point estimates as a stand-in for the truth when studying the model’s implications for optimal decision-making. This practice ignores model ambiguity, exposes the decision problem to misspecification, and ultimately leads to post-decision disappointment. Using statistical decision theory, we develop a framework to explore, evaluate, and optimize robust decision rules that explicitly account for estimation uncertainty. We show how to operationalize our analysis by studying robust decisions in a stochastic dynamic investment model in which a decision-maker directly accounts for uncertainty in the model’s transition dynamics.
Keywords:
decision-making under uncertainty; robust Markov decision process;
JEL-Classification:
D81; C44; D25;