Latest Publications
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Field evidence suggests that agents belonging to the same group tend to behave similarly, i.e., behavior exhibits social interaction effects. Testing for such effects raises severe identification problems. We conduct an experiment that avoids these problems. The main design feature is that each subject simultaneously is a member of two randomly assigned and economically identical groups where only members (‘neighbors’) are different. In both groups subjects make contribution decisions to a public good. We speak of social interactions if the same subject at the same time makes group-specific contributions that depend on their respective neighbors’ contribution. Our results are unambiguous evidence for social interactions. A majority of subjects is very strongly influenced by the contributions of their respective neighbors. Roughly ten percent exhibit no social interactions.
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The current analysis introduces human capital investments which as all other investment projects must be carried out given ex-ante uncertain returns. This return uncertainty reflects that particular ex-post ability realizations may or may not induce the possibility to engage in profitable entrepreneurial activity. Managed firms which recruit randomly while offering a certain wage-income cannot be kept from entering the industry. However, if it is individual beneficial to seek employment in such firms, given that human capital investments are sunk, the resulting industry structure provides less incentives to invest than a purely entrepreneurial industry. While it remains true that entrepreneurial firms if they exist are founded by teams of superior realized abilities, the equilibrium analysis reveals a rather different perspective of the incentive mechanism. Human capital investments are not so much necessary in order to induce entrepreneurial activity. Rather, entrepreneurial activity provides the effective incentives to invest in human capital. This distinction is important to note. Due to the risk-shifting property associated with employment in managed firms, policies directed at maximizing entrepreneurial activities will generally fail to implement an efficient solution. As with every other incentive mechanism, incentive compatibility constitutes a constraint on the possibility to achieve a first-best solution.
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Economic theory advances various arguments in favor of and against privatizing education. In this paper we investigate the extent to which these arguments influence voters opinions. We analyze two popular referenda in which some 400,000 voters in two Swiss cantons expressed their opinions on the issue of education vouchers and direct subsidies to private schools. We find that successful attempts to move towards a more privatized education system rest mainly on pure income effects, some other socio-economic determinants, ideological convictions, and possibly the perceived quality of the public schools. Peer-group and tax-burden effects, which play a prominent role in the theoretical literature, do not appear to significantly influence voting behavior.
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(2003): Spiele zu Dritt, oder : Fördern die Neuregelungen des Sarbanes-Oxley-Act die Unabhängigkeit des Abschlussprüfers? Die Unternehmung. 2003, 57(6), pp. 471-496. ISSN 0042-059X
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(2003): Productive government spending, growth, and sequential voting European Journal of Political Economy. 2003, 19(2), pp. 227-246. Available under: doi: 10.1016/S0176-2680(02)00168-4
This paper considers an endogenous growth model with productive government spending in which overlapping generations of agents vote sequentially on policy. With sequential majority voting, there is a multiplicity of politico-economic equilibria originating from self-fulfilling policy expectations. Some of these equilibria are Pareto-inefficient and there are endogenous cycles. A constitutional rule providing partial commitment significantly shrinks the set of politico-economic equilibria, removing all inefficiencies and cycles. However, a likely outcome is that government size is too high relative to the growth maximizing size.
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(2003): Money and Growth in a Production Economy with Multiple Assets Macroeconomic Dynamics. 2003, 7(5), pp. 670-690. Available under: doi: 10.1017/S1365100503020200
We consider a Diamond-type model of endogenous growth in which there are three assets: fiat money, government bonds, and equity. Because of productivity shocks, the equity return is uncertain, and risk-averse investors require a positive equity premium. Typically, there exist two steady states, but only one of them turns out to be stable. Tight monetary policy is harmful for growth in the stable steady state. These results hold under four different monetary policy strategies applied by the monetary authority. A monetary contraction increases the bond return and reduces the equity premium and thereby capital investment and growth.
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This paper shows that endogenous adjustments in the composition of labor supplies magnify the effects of changes in commodity prices on the measured skill premium under quite plausible conditions. These composition effects arise from decisions of individuals with heterogeneous inherent abilities about acquiring human capital. They reinforce the well-known Stolper-Samuelson effect on the measured skill premium in countries with a sufficiently high relative supply of skilled labor, but compensate them otherwise. As a result, the model can account for the observation of a worldwide increase in the skill premium during the last two decades.
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(2003): Renaissance der Lehre – Renaissance des Berufs? : Aktuelle Reformansätze der beruflichen Bildung in England und Wales, Schottland und Australien ARNOLD, Rolf, ed.. Berufsbildung ohne Beruf? : Berufspädagogische, bildungspolitische und internationale Perspektiven. Baltmannsweiler: Schneider-Verl. Hohengehren, 2003, pp. 170-189. Grundlagen der Berufs- und Erwachsenenbildung. 34. ISBN 3-89676-716-X
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Im Krankheitsfalle wünscht sich fast jeder ein Organ, während nur wenige sich tatsächlich mit der Spende ihrer Organe einverstanden erklären. Friedrich Breyer diskutiert Anreize, die aus ökonomischer Perspektive geeignet sind, diese Kluft zu überwinden. Er stellt die qualifizierte Wartezeit des "Solidarmodells" vor, das bei gleicher medizinischer Dringlichkeit die Bevorzugung desjenigen vorsieht, der ab Volljährigkeit jünger seine Organe für eine Spende freigab.
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(2003): Ein dynamisches Hürdenmodell für diskrete Transaktionspreisänderungen auf Finanzmärkten FRANZ, Wolfgang, ed. and others. Empirische Wirtschaftsforschung : Methoden und Anwendungen. Tübingen: Mohr, 2003, pp. 153-178. Wirtschaftswissenschaftliches Seminar Ottobeuren. 32. ISBN 978-3-16-148158-1
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dc.contributor.author: Liesenfeld, Roman
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(2003): Der Zusammenhang zwischen emotionalem, motivationalem und kognitivem Erleben in einer selbstorganisationsoffenen Lernumgebung - Eine prozessuale Analyse des subjektiven Erlebens im Rechnungswesenunterricht VAN BUER, Jürgen, ed. and others. Berufliche Bildung auf dem Prüfstand - Entwicklung zwischen systemischer Steuerung, Transformation durch Modellversuche und unterrichtlicher Innovation. Frankfurt a. M.: Lang, 2003, pp. 207-227
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(2003): On the Nature of Fair Behavior Economic Inquiry. 2003, 41(1), pp. 20-26. ISSN 0095-2583. eISSN 1465-7295. Available under: doi: 10.1093/ei/41.1.20
This article shows that identical offers in an ultimatum game generate systematically different rejection rates depending on the other offers that are available to the proposer. This result casts doubt on the consequentialist practice in economics to define the utility of an action solely in terms of the consequences of the action irrespective of the set of alternatives. It means in particular that negatively reciprocal behavior cannot be fully captured by equity models that are exclusively based on preferences over the distribution of material payoffs.
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Aufbauend auf der Hypothese, dass Arbeitsmärkte durch unvollständige Information charakterisiert sind, werden in diesem Arbeitspapier neuere Entwicklungen innerhalb eines Zweiges informationsökonomischer Ansätze vorgestellt: der Suchtheorie. Dabei werden ausführlich insbesondere jene Ansätze vorgestellt, explizit der vermuteten Heterogenität der beiden Marktseiten, Firmen und Arbeitnehmer, Rechnung tragen. Standardergebnisse traditioneller ökonomischer Theorie sind im Lichte informationsökonomischer Ansätze oft nicht haltbar. Deshalb soll in diesem Arbeitspapier insbesondere der Fragestellung nachgegangen werden, ob das Resultat der klassischen Arbeitsmarkttheorie, dass gewerkschaftliche Lohnbeeinflussung zu höherer Arbeitslosigkeit führt, im Kontext der Suchtheorie valide ist. Auf dem Weg hin zu einer empirisch gültigen Theorie des Arbeitsmarktes stellt insbesondere ein Ansatz, der beidseitig heterogene Akteure erlaubt, einen wichtigen Beitrag dar. Theoretische Ergebnisse hinsichtlich der Wirkungen gewerkschaftlicher Lohnbeeinflussung sind gemischt. Das Arbeitspapier findet keinen eindeutigen theoretischen Zusammenhang zwischen gewerkschaftlicher Verhandlungsmacht und Arbeitslosigkeit.
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The extraordinary height of the U.S. current account deficits in the 90s
gave rise to concern, a variety of papers and political recommendations
revealing the very contrary opinions of economists on the subject.
From this alarming evolution, the question of sustainability of such a large
indebtedness arises.
Are the U.S. already bankrupt?
If not, what is the ultimate level of its foreign debt?
As a starting point, the variety of meanings of the term `sustainability'
are consolidated to a consistent definition.
Introducing terminology and reviewing the basic principles of balance
of payments accounting, the evolution of the U.S. balance of payments
and international debt is presented in numbers. The models of the central parts of the text
emphasise the importance of understanding the current account as an
intertemporal phenomenon.
The `real' perspective is presented in the baseline representative agent
and overlapping generations macro-models whereas the monetary perspective
is exposed in a portfolio balance approach.
These models are confronted with IMF statistics and checked for
plausibility of their implications.
As the very crucial point for the U.S. case, the
significance of the dollar standard of international financial markets
is discussed
thereafter.
Finally, a detailed breakdown of the income account reveals surprising
insights on the quality of U.S. agents' investment decisions.
The overall result is striking: Although the debt-to-GDP ratio is
approaching its 5 per cent red-mark, there are no effects observable
in fundamental variables indicating bankruptcy or un-sustainability of
the U.S. international debt.
On the contrary - for monetary reasons, the U.S. will be able to run
a significant higher level of external debt and models in conjunction
with data suggest that the U.S. is approaching a long-run
debt-to-GDP steady state. In these results, the author acknowledges the
outsider position of economists. -
(2003): Wissenschaftliche Evaluation des Übungsfirmenkonzepts in Baden-Württemberg : Skizzierung des Forschungsvorhabens Wirtschaft Plus : Magazin für Wirtschaft und Bildung. 2003(1), pp. 5-8. ISSN 1617-4151
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dc.contributor.author: Ruf, Michael
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(2003): Brand Equity als Führungsinstrument BERNDT, Ralph, ed.. Leadership in turbulenten Zeiten. Berlin: Springer, 2003, pp. 309-317. Herausforderungen an das Management. 10. ISBN 978-3-540-00495-0
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(2003): The causal effect of overqualification on earnings : evidence from a Bayesian approach BÜCHEL, Felix, ed., Andries DE GRIP, ed., Antje MERTENS, ed.. Overeducation in Europe : current issues in theory and policy : [selected and revised papers from the International Conference ' Overeducation in Europe : What Do We Know? ' at the Max Planck Institute for Human Development, Berlin (MPIB), on 22 - 23 November 2002. Northampton [u.a.]: E. Elgar, 2003, pp. 93-108. ISBN 1-84376-361-3
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dc.contributor.author: Jochmann, Markus
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In der Makroökonomik werden Liquiditätsfallen ohne Mikrofundierung als existent angenommen und die Japan-Krise hat Liquiditätsfallen zum aktuellen Diskussionsthema gemacht. Deshalb wird die Frage der Existenz von Liquiditätsfallen hier portfolio-theoretisch untersucht im Rahmen einer klassischen Mean-Variance-Ansatzes für zwei Assets (Geld und Wertpapiere). Vorausgesetzt wird eine stochastisch inflationäre Anlageumgebung ohne Geldillusion im Anlegerverhalten. Das Resultat ist negativ insofern als Liquiditätsfallen ausgeschlossen werden können, solange die erwartete Ertragsdifferenz der beiden Assets positiv zugunsten des Wertpapiers ausfällt (positiver nomineller Zinssatz auf Wertpapiere). Liquiditätsfallen sind ebenfalls ausgeschlossen, solange das Risiko der Ertragssatzdifferenz eine negative Rolle spielt, d.h. solange das Risiko größer null ist und solange gleichzeitig Risiko-Aversion besteht. Damit eine Liquiditätsfalle existiert muss entweder das Risiko überhaupt fehlen (Standardabweichung von null der Ertragsdifferenz) oder es darf keine Risikoaversion der Anleger geben.
Die in makroökonomischen Lehrbüchern als Liquiditätsfalle bezeichnete Konstellation (flacher Verlauf der Geldnachfragefunktion und positiver nomineller Zinssatz größer null) impliziert aus portfolio-theoretischer Sicht keine Liquiditätsfalle, sondern eine Wertpapierfalle. -
(2003): The Impact of Training on Earnings : differences between Participant Groups and Training Forms
While there is a broad literature on the general wage effect of training, little is known about the effects of different training forms and about the effects for heterogeneous training participants. This study therefore adds two aspects to the literature on earnings effects of training. First, the earnings effect of training is calculated for different types of employees, i.e. discriminating between qualification level, experience, job tenure, and other attributes. Second, we distinguish between the earnings impact of external and internal training. For our analysis, we use the Qualification and Career survey , a rich German data set with information on 0.1 percent of all individuals employed in Germany in 1998/1999. We use a one-step fullinformation maximum likelihood and a two stage least squares estimation to regress the impact of training participation on earnings correcting for the endogeneity of training participation. By using a broad list of employee and employer characteristics, we try to avoid omitted variable bias. We find the training earnings markup to be positively correlated with qualification and experience. The analysis of internal and external training reveals that this result is driven by external training only. Internal training does not have a significant earnings effect. The correction for selection into training leads to an increase in the training coefficients and a decrease of its significance.
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Although there has been much attention in recent years on the effects of additive background risks, the same is not true for its multiplicative counterpart. We consider random wealth of the multiplicative form xy, where x and y are statistically independent random variables. We assume that x is endogenous to the economic agent, but that y is an exogenous and nontradable background risk, which represents a type of market incompleteness. Our main focus is on how the presence of the multiplicative background risk y affects risk-taking behavior for decisions on the choice of x. We characterize conditions on preferences that lead to more cautious behavior