FEMM - Working Paper Series - 2012



Andreas Knabe/Ronnie Schöb/Joachim Weimann:
Partnership, Gender Roles and the Well-Being Cost of Unemployment

We use the differences between life satisfaction and emotional well-being of employed and unemployed persons to analyze how a person's employment status affects cognitive well-being. Our results show that unemployment has a negative impact on cognitive, but not on affective well-being, which we interpret as a loss in identity utility. Living in a partnership strengthens the loss in identity utility of men, but weakens that of women. Unemployment of a person's partner reduces the identity loss of unemployed men, but raises it for women. These results suggest that the unemployed's feeling of identity is affected by traditional gender roles, while this does not seem to be the case for the affective part of their subjective well-being.

JEL: I31, J60, J22
Keywords: unemployment, happiness, life satisfaction, Day Reconstruction Method, identity, partnership, gender roles

Michèle Belot/Marina Schröder:
Sloppy Work, Lies and Theft: A Novel Experimental Design to Study Counterproductive Behaviour

We propose a novel experimental design to study counterproductive behaviour in a principal agent setting. The design allows us to study and derive clean measures of different forms of counterproductive behaviour in a controlled but non obtrusive manner. We ask participants to complete a specific task (identify euro coins) and report their output. Participants can engage in various forms of counterproductive behaviour, none of them being offered to them explicitly. They can make mistakes in the identification task, lie in their report or even steal coins. We present an application of the design to study the effects of different pay schemes (competition, fixed pay and piece rate) on counterproductive behaviour. On average counterproductive behaviour amounts to 10 percent of the average productivity, almost all arising through mistakes and overreporting of output. We find essentially no evidence of theft. Moreover, we find that both productive and counterproductive behaviour are significantly higher under competition than under the two other pay schemes.

JEL: C91, J24, J30, M52
Keywords: counterproductive behaviour, compensation, experiment, competition, piece rate, …fixed pay

Daniel Cracau/Benjamin Franz:
An experimental study of mixed strategy equilibria in simultaneous price-quantity games

We study oligopoly games with firms competing in prices and quantities at the same time. We systematically compare our experimental results to the theoretical predictions using the mixed strategy equilibria for linear demand functions. For the duopoly game, we observe that the mixed strategy equilibrium predicts average outcomes better than Cournot and Bertrand do. Subjects' price choices are mainly between marginal cost and monopoly level but do not follow the equilibrium distribution. Although average prices and profits are above theoretical values, we do not observe a high level of collusion as expected in the literature. By comparing simulations based on the mixed strategy equilibrium to our experimental outcomes, we conclude that in this game price setting can be explained by strategic reaction to preceding round results. In contrast to the equilibrium prediction, we observe a decrease in prices and negative average profits for the triopoly game.

JEL: D43, L11
Keywords: APrice-Quantity Competition; Mixed Strategy Equilibria; Experimental Economics; Learning Direction Theory

Guido Voigt:
Contracting under asymmetric holding cost information in a serial supply chain with a nearly profit maximizing buyer

Screening contracts (or non-linear "menu of contracts") are frequently used for aligning the incentives in supply chains with private information. In this context, it is assumed that all supply chain parties are strictly (expected) profit maximizing and, therefore, sensible to even arbitrarily small pay-off differences between contract alternatives. However, previous behavioral work on contracting under asymmetric information in supply chains shows that agents (buyers) are not always strictly profit maximizing. Instead, they sometimes tend to choose contracts that have only a minor impact on their own performance but a substantially negative impact on the principal's (supplier's) and the overall supply chain's performance. Thus, these studies indicate that the buyers are in fact not strictly but only nearly profit maximizing when making their contract choices. The present work relaxes the assumption of the strictly profit maximizing buyer in a serial supply chain for a lotsizing framework with asymmetrically distributed holding cost information and deterministic end-customer demand. The study provides researchers and managers an approach on how to account for the buyer's insensitivity to arbitrarily small pay-off differences while providing a solution method for the resulting non-linear mathematical program. A numerical study compares the advantages of the "behavioral robust" contract assuming only nearly profit maximizing buyers against the classical screening contract assuming strictly profit maximizing buyers. The results highlight that supply chain performance losses can be substantially reduced under the behavioral robust contract.

Keywords: Asymmetric information · Supply chain coordination · Contracting · Behavioral modeling

Dirk Bethmann/Michael Kvasnicka:
A Theory of Child Adoption

Women can bear own children or adopt them. Extending economic theories of fertility, we provide a first theoretical treatment of the demand for adoption. We show that the propensity to adopt a child increases in the degree of own altruism, infertility, relatedness to the child, costs of own child birth, and any adoption-specific monetary return that is received net of the costs of adopting the child. Our model makes several testable predictions which receive empirical support. These include a higher propensity to adopt among infertile adults, relatives, women with high earnings potential, and celebrities.

JEL: J12, J13, D02
Keywords: Adoption, Demand for Adoption, Fertility, Children, Altruism

Eike B. Kroll/Ralf Morgenstern/Thomas Neumann/Stephan Schosser/Bodo Vogt:
Bargaining power does not matter when sharing losses - Experimental evidence of Inequality Aversion in the Nash bargaining game

While experimental research on social dilemmas focuses on the distribution of gains, this paper analyzes social preferences in the case of losses. In this experimental study, participants share a loss in a Nash bargaining game. Instead of monetary losses, we use waiting time as an incentive. We assume that participants prefer less to more waiting time. Our experiment consists of four versions of the Nash bargaining game, which vary in a way that allows a comparison of four classical concepts on negotiations (Nash, Equal Loss, Equal Gain, and Kalai-Smorodinski), and Inequality Aversion. We find an equal split of waiting time for all parameter variations. Therefore, our experimental evidence shows that Inequality Aversion provides a better prediction than do classical concepts for the outcome of a Nash bargaining game involving losses. Furthermore, participants resort to Inequality Aversion at the cost of overall welfare.

JEL: C7, C9
Keywords: bargaining, losses, inequality aversion, experimental economics

Mark Schopf/Hendrik Ritter:
Reassessing the Green Paradox

This paper deals with possible foreign reactions to domestic carbon demand reducing policies. It differentiates between demand side and supply side reactions as well as between intra- and intertemporal shifts of greenhouse gas emissions. In our model, we integrate increasing marginal physical extraction costs of fossil fuels into the general equilibrium carbon leakage model of Eichner & Pethig (2011). The results are as follows: The conditions for the emergence of the weak green paradox are similar but somewhat tighter than those derived by Eichner & Pethig (2011). Additionally, a strong green paradox can arise in our model under supplemental constraints. That means a "green" policy measure might not only lead to an acceleration of fossil fuel extraction but to an increase in the cumulative extraction.

JEL: Q31, Q32, Q54
Keywords: Natural Resources, Carbon Leakage, Green Paradox

Eike B. Kroll/Judith N. Trarbach/Bodo Vogt:
Do people have a preference for increasing or decreasing pain? An experimental comparison of psychological and economic measures in health related decision making

This paper investigates preferences for different health profiles, especially sequences of increasing and decreasing pain. We test conflicting predictions in terms of preferences over two painful sequences. The QALY concept relevant for the determination of different levels of health-related quality of life implies indifference, whereas behavioral theories find preferences related to ordering, following the peak-end-rule. Using an experimental design with real consequences we generate decisions about painful sequences induced by the cold pressor test. The results are compared with hypothetical choice data elicited using standard methods. We find that hypothetical methods reveal decisions in line with the peak-end-rule. However when it comes to real consequences of their decisions, subjects are on average not willing to pay for that preference.

JEL: D8, C9
Keywords: pain, peak-end-rule, willingness-to-pay

Sebastian Lehmann/Martin Reimann:
The influence of time and money on product evaluations - a neurophysiological analysis

"Time is money" is how a common saying goes, reflecting a widespread assumption in many people's everyday life. It seems that money and time are very similar concepts which might even be exchangeable all together. However, the neurophysiological processes underlying the activation of time or money are not yet completely understood. In order to understand in how far and in which dimensions the concept of time versus the concept of money effects human behavior we enquired the neural differences of the time versus money effect. This paper broadens the understanding of both concepts and investigates the posited distinct mindsets of time and money using functional magnetic resonance imaging (fMRI) technology. A sample of 44 righthanded adults has been analyzed. Our data supports the idea of the existence of two distinct mindsets for time and money. However, contrasting both conditions in one general linear model only a few significant differences have been found. The insula seems to be a crucial locus for the neural difference of both mindsets. Higher insula activation in the time condition suggests stronger urge for the product primed with time.

Keywords: time-versus-money effect, priming, product evaluations, insula, functional magnetic resonance imaging (fMRI), consumer neuroscience, decision neuroscience

Patrick Brämer/Horst Gischer/Toni Richter/Mirko Weiß:
Diverse Degrees of Competition within the EMU and their Implications for Monetary Policy

Our paper calls attention to the heterogeneous levels of competition in EMU banking systems. We enhanced the ECB MFI interest rate statistics by calculating a lending rate average weighted by loan volumes for each EMU member country. Employing a modified Lerner Index, our unique data set enables us to calculate banks' price setting power in the national lending business alone, instead of measuring market power for banks' total business. For 12 countries, we ultimately show that market power in the exclusive segment of lending is greater than market power in total banking business. In an OLS regression model, we investigate to what extent loan rate variations can be explained by changing degrees of market power during the period 2003-2009. Significant cross-country differences can be observed. We find that changes in the national degree of competition considerably affect funding conditions in the individual countries and therefore hinder a homogeneous transmission of ECB monetary policy.

JEL: E43, E52, E58, L16
Keywords: banking competition; European Monetary Union; Lerner Index; monetary policy

Joachim Weimann/Jeannette Brosig-Koch/Heike Hennig-Schmidt/Claudia Keser/Christian Stahr:
Public-good experiments with large groups

Many of real-world public-goods are characterized by a marginal per capita return (MPCR) close to zero and have to be provided by large groups. Up until now, there is almost no evidence on how large groups facing a low MPCR behave in controlled public-good laboratory experiments involving financial incentives. Connecting four experimental laboratories located in four di¤erent German universities via Internet, we are able to run such experiments. In ad-dition to the group size (60 and 100 subjects), we vary the MPCR which is as small as 0:02 or 0:04. Our data reveal a strong MPCR effect, but almost no group-size e¤ect. Our data demonstrates that, even in large groups and for low MPCRs, considerable contributions to public goods can be expected. Interestingly, the contribution patterns observed in large and very small groups are very similar. To the best of our knowledge, this study is the first one that includes large-group laboratory experiments with a small MPCR under conditions comparable to previous small-group standard public-good experiments.

JEL: C91, C72, H42

Jörg Bühnemann:
Lissabon 2010 - Eine F&E-orientierte Konzeption neuer Förderregionen

Forschung und Entwicklung (F&E) ist die Basis von marktfähigen Innovationen und besitzt damit einen zentralen Stellenwert für das Wirtschaftswachstum. Um die F&E-Tätigkeit von Unternehmen zu steigern, entwickelt die Politik gezielte Fördermaßnahmen, die beispielsweise in strukturschwachen Regionen Wachstumsimpulse erzeugen sollen. Hierzu zählen in Deutschland vorrangig die neuen Bundesländer. Nach zwanzig Jahren deutscher Einheit wächst der Druck, diese gezielte Förderung aufzugeben und neue Fördergebiete mit einer gesamtdeutschen Sichtweise zu konzeptionieren. Konkrete Maßnahmen wurden bisher nicht eingeleitet. Der vorliegende Beitrag unterbreitet auf Basis von F&E-Indikatoren einen Vorschlag zur Festlegung neuer Förderregionen und differenziert dabei nicht zwischen alten und neuen Bundesländern. Auf dieser Grundlage können neue spezifische Förderprogramme entwickelt werden, die sich an den unterschiedlichen Bedürfnissen der jeweiligen Förderregionen ausrichten, denn nicht jedes Förderprogramm ist in jeder Region erfolgreich. Die F&E-Indikatoren werden aus der europäischen Innovationspolitik abgeleitet und sind aufgrund der durchgeführten Sekundärdatenanalyse objektiv überprüfbar.

Keywords: Lissabon-Strategie, Wachstum, Innovation, F&E, Förderpolitik, Cluster

Andreas Bortfeldt/Gerhard Wäscher:
Container Loading Problems - A State-of-the-Art Review

Container loading is a pivotal function for operating supply chains efficiently. Underperformance results in unnecessary costs (e.g. cost of additional containers to be shipped) and in an unsatisfactory customer service (e.g. violation of deadlines agreed to or set by clients). Thus, it is not surprising that container loading problems have been dealt with frequently in the operations research literature. It has been claimed though that the proposed approaches are of limited practical value since they do not pay enough attention to constraints encountered in practice.
In this paper, a review of the state-of-the-art in the field of container loading will be given. We will identify factors which - from a practical point of view - need to be considered when dealing with container loading problems and we will analyze whether and how these factors are represented in methods for the solution of such problems. Modeling approaches, as well as exact and heuristic algorithms will be reviewed. This will allow for assessing the practical relevance of the research which has been carried out in the field. We will also mention several issues which have not been dealt with satisfactorily so far and give an outlook on future research opportunities.

Keywords: container loading, cutting, packing, constraints, exact algorithms, heuristics

Lutz-Ulrich Haack/Martin C. Reimann:
Compliance Framing - Framing Compliance

Für die systematische Sicherstellung der Einhaltung von Gesetzen und internen Richtlinien (Compliance) müssen Unternehmen diverse organisatorische Maßnahmen treffen. Compliance Management Systeme (CMS) haben insbesondere die herausfordernde Aufgabe, mittels eines internen Compliance-Marketing für eine angemessene und vor allem wirksame Compliance-Kultur zu sorgen. Die aktuelle Compliance-Literatur und Erkenntnisse der persuasiven Goal-Framing-Forschung geben unterschiedliche Handlungsempfehlungen hinsichtlich einer anzustrebenden vertrauens- versus einer anzustrebenden regelbasierten Compliance-Kultur.

Corporations have to install various organizational measures to comply with legal as well as internal guidelines systematically. Compliance management systems have the challenging task to make use of an internal compliance-marketing approach in order to ensure not only an adequate but also effective compliance-culture. Compliance-literature and findings of persuasive goal-framing-theory give opposite implications for establishing a rather values- versus rule-based compliance-culture respectively.


Compliance, Compliance-Kultur, regelbasierte Compliance- Kultur, vertrauensbasierte Compliance-Kultur, Compliance- Marketing, Compliance-Grundtonalität, Compliance Management System, Compliance-Framing, Compliance-Goal-Framing

Compliance, Compliance-Culture, rule-based Compliance- Culture, values-based Compliance-Culture, Compliance-Tonality, Compliance-Marketing, Compliance Management System, Compliance-Framing, Compliance-Goal-Framing

Markus Sass:
Long-term Competitive Balance under UEFA Financial Fair Play Regulations

This paper analyzes the long-term development of competitive balance in a professional team sports league with win-maximizing clubs facing a strict break-even constraint as imposed by UEFA's new Financial Fair Play Regulations. A classical model of professional team sports leagues is employed to calculate seasonal competitive balance, which solely depends on the market size of clubs. In the multi-period version of the model, a market size function, which captures the empirical fact that a club's revenue potential is positively affected by its historic success, is introduced. The model shows that there is only one long-term steady-state equilibrium, in which big clubs totally dominate small clubs and competitive balance is maximally uneven. The intuition is that a club, which becomes more successful, is able to attract more and more spectators yielding higher revenue and leading to the club being able to afford more playing talent. This in turn leads to greater success, which in turn attracts even more spectators and so forth. Since small clubs are no longer allowed to overspend and thereby invest their way to a greater market size in the future, the model predicts a negative trend in competitive balance to be the result of the new UEFA Financial Fair Play Regulations.

JEL: L83
Keywords: Sports Economics, Professional Team Sports, Competitive Balance, UEFA Financial Fair Play

Sebastian Henn:
Variable Neighborhood Search for the Order Batching and Sequencing Problem with Multiple Pickers

Order picking deals with the retrieval of articles from their storage locations in order to satisfy customer requests. The transformation and consolidation of customer orders into picking orders (batches) is pivotal for the performance of order picking systems. Typically, customer orders have to be completed by certain due dates in order to avoid delays in production or in the shipment to customers. The composition of the batches, their processing times, their assignment to order pickers and the sequence according to which they are scheduled determine whether and the extent to which the due dates are missed. This article shows how Variable Neighborhood Descent and Variable Neighborhood Search can be applied in order to minimize the total tardiness of a given set of customer orders. In a series of extensive numerical experiments, the performance of the two approaches is analyzed for different problem classes. It is shown that the proposed methods provide solutions which may allow order picking systems to operate more efficiently.

Keywords: Warehouse Management; Order Batching; Batch Sequencing; Due Dates; Variable Neighborhood Descent; Variable Neighborhood Search

Patrick Brämer/Horst Gischer:
Domestic Systemically Important Banks: An Indicator-Based Measurement Approach for the Australian Banking System

This paper serves as a response to the assessment methodology of the Basel Committee on Banking Supervision to identify systemically important banks. Based on the official technique, which requires an extensive collection of bank data, our paper develops a practicable modification. Utilising readily available indicators, we determine the domestic systemic risk of each licensed bank in Australia in the period 2002-2011. Our quantitative results uncover not only high levels of systemic risk for the four major banks, but their rising dominance during the global financial crisis. Consequently, we introduce a regulatory proposal that enables authorities to reduce the systemic risk of individual institutions.

JEL: G01, G18, G21, L50
Keywords: Basel III, financial regulation, indicator-based measurement, systemic risk

Markus Sass/Joachim Weimann:
The Dynamics of Individual Preferences in Repeated Public Good Experiments

We investigate the stability of individual behavior in a repeated public good experiment over time by reinviting subjects back to the lab up to four times in one week intervals. We exclude effects due to learning about others' behavior and reputation building by employing a non-learning and non-reputation environment: subjects are neither told nor paid their earnings until the very end of their participation and thus deprived of any feedback information and strategic possibilities to signal their intentions. This experimental design thus leaves unstable preferences as the most likely source for unstable behavior. We observe that, in the first wave of the experiment, subjects contribute to the public good in accordance to other-regarding preferences, but become more selfish in the latter waves of the experiment and consequently contributions to the public good decrease over time. The decline is mainly caused by initially conditional cooperators who turn into free riders over the course of the experiment.

JEL: C90, C91, C72, C73
Keywords: Individual preferences, consistency, stability, experimental economics

Dieter Schmidtchen/Roland Kirstein:

Ordnung ist ein Begriff, der eine Vielfalt von Bedeutungsvarianten aufweist: Man spricht von Rechtsordnung, Wirtschaftsordung, Präferenzordnung, Hausordnung oder Marschordnung; die Mathematik kennt die Ordnungsrelation; in der Systemtheorie ist mit Ordnung der Organisationsgrad eines Systems gemeint, und die Thermodynamik und die Informations-wissenschaft definieren ihn als reziproken Wert der Entropie. Läßt sich in dieser bunten Palette an Bedeutungen ein gemeinsames Element, ein Leitgedanke, identifizieren? Eine Antwort auf diese Frage versuchen wir in Kapitel 1 ("Begriff") zu liefern. Kapitel 2 enthält einen kurzen Abriß der Geschichte des Begriffs. Im darauf folgenden Kapitel 3 werden die Arten von Ordnung aus Sicht der Ökonomie behandelt. Kapitel 4 identifiziert den Ursprung vorhersagbaren Verhaltens - eine conditio sine qua non für das Enstehen von Handelnsordnungen. Kapitel 5 beschreibt das Forschungsprogramm der evolutorischen Ordnungstheorie: Zunächst wird anhand eines einfachen Modells gezeigt wie Konventionen entstehen. Sodann wird der Zusammenhang zwischen Transaktionskosten und der spontanen Ordnung untersucht. Schließlich wird der sogenannte Koordinationsansatz, in dem Koordinationslücken und Unternehmertum eine zentrale Rolle spielen, dargestellt. In Kapitel 6 wird der Grundgedanke der Ordnungspolitik erläutert. Das den Beitrag abschließende Kapitel 6 widmet sich der Frage der Koexistenz von Gleichgewichtstheorie, Marktprozesstheorie und evulotorischer Ordnungstheorie.

JEL: C72, D8
Keywords: Evolutorische Ökonomik, Spontane Ordnung, Transaktionskosten

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