infonet-economy

In one of his publications Aristotle states ”All human beings by their nature desire to know” [Kraut 1991]. This desire is initiated the day we are born and accompanies us for the rest of our life. While at a young age our parents serve as one of the principle sources for knowledge, this changes over the course of time. Technological advances and particularly the introduction of the Internet, have given us new possibilities to share and access knowledge from almost anywhere at any given time. Being able to access and share large collections of written down knowledge is only one part of the equation. Just as important is the internalization of it, which in many cases can prove to be difficult to accomplish. Hence, being able to request assistance from someone who holds the necessary knowledge is of great importance, as it can positively stimulate the internalization procedure. However, digitalization does not only provide a larger pool of knowledge sources to choose from but also more people that can be potentially activated, in a bid to receive personalized assistance with a given problem statement or question. While this is beneficial, it imposes the issue that it is hard to keep track of who knows what. For this task so-called Expert Finder Systems have been introduced, which are designed to identify and suggest the most suited candidates to provide assistance. Throughout this Ph.D. thesis a novel type of Expert Finder System will be introduced that is capable of capturing the knowledge users within a community hold, from explicit and implicit data sources. This is accomplished with the use of granular computing, natural language processing and a set of metrics that have been introduced to measure and compare the suitability of candidates. Furthermore, are the knowledge requirements of a problem statement or question being assessed, in order to ensure that only the most suited candidates are being recommended to provide assistance.

In this paper we conduct a laboratory experiment to test the extent to which Moore and Repullo’s subgame perfect implementation mechanism induces truth-telling, both in a setting with perfect information and in a setting where buyers and sellers face a small amount of uncertainty regarding the good’s value. We find that Moore–Repullo mechanisms fail to implement truth-telling in a substantial number of cases even under perfect information about the valuation of the good. Our data further suggests that a substantial proportion of these lies are made by subjects who hold pessimistic beliefs about the rationality of their trading partners. Although the mechanism should—in theory—provide incentives for truth-telling, many buyers in fact believe that they can increase their expected monetary payoff by lying. The deviations from truth-telling become significantly more frequent and more persistent when agents face small amounts of uncertainty regarding the good’s value. Our results thus suggest that both beliefs about irrational play and small amounts of uncertainty about valuations may constitute important reasons for the absence of Moore–Repullo mechanisms in practice.

Do wealth shocks affect the health of the elderly in developed countries? The economic literature is skeptical about such effects which have so far only been found for poor retirees in poor countries. In this paper I show that wealth shocks also matter for the health of wealthy retirees in the US. I exploit the booms and busts in the US stock market as a natural experiment that generated considerable gains and losses in the wealth of stock-holding retirees. Using data from the Health and Retirement Study I construct wealth shocks as the interaction of stock holdings with stock market changes. These constructed wealth shocks are highly predictive of changes in reported wealth. And they strongly affect health outcomes. A 10% wealth shock leads to an improvement of 2-3% of a standard deviation in physical health, mental health and survival rates. Effects are heterogeneous across physical health conditions, with most pronounced effects for the incidence of high blood pressure, smaller effects for heart problems and no effects for arthritis, diabetes, lung diseases and cancer. The comparison with the cross-sectional relationship of wealth and health suggests that the estimated effects of wealth shocks are larger than the long-run wealth elasticity of health.

With infinite horizon, optimal rules for sequential search from a known distribution feature a constant reservation value that is independent of whether recall of past options is possible. We extend this result to the the case when there are multiple distributions to choose from: it is optimal to sample from the same distribution in every period and to continue searching until a constant reservation value is reached.

Has rising trade integration between the U.S. and China contributed to the polarization of U.S. politics? Analyzing outcomes from the 2002 and 2010 congressional elections, we detect an ideological realignment that is centered in trade-exposed local labor markets and that commences prior to the divisive 2016 U.S. presidential election. Exploiting the exogenous component of rising trade with China and classifying legislator ideologies by their congressional voting record, we find strong evidence that congressional districts exposed to larger increases in import competition disproportionately removed moderate representatives from office in the 2000s. Trade-exposed districts initially in Republican hands become substantially more likely to elect a conservative Republican, while trade-exposed districts initially in Democratic hands become more likely to elect either a liberal Democrat or a conservative Republican. Polarization is also evident when breaking down districts by race: trade-exposed locations with a majority white population are disproportionately likely to replace moderate legislators with conservative Republicans, whereas locations with a majority non-white population tend to replace moderates with liberal Democrats. We further contrast the electoral impacts of trade exposure with shocks associated with generalized changes in labor demand and with the post-2006 U.S. housing market collapse.

The structure of marriage and child-rearing in U.S. households has undergone two marked shifts in the last three decades: a steep decline in the prevalence of marriage among young adults, and a sharp rise in the fraction of children born to unmarried mothers or living in single-headed households. A potential contributor to both phenomena is the declining labor-market opportunities faced by males, which make them less valuable as marital partners. We exploit large scale, plausibly exogenous labor-demand shocks stemming from rising international manufacturing competition to test how shifts in the supply of young ‘marriageable’ males affect marriage, fertility and children's living circumstances. Trade shocks to manufacturing industries have differentially negative impacts on the labor market prospects of men and degrade their marriage-market value along multiple dimensions: diminishing their relative earnings—particularly at the lower segment of the distribution—reducing their physical availability in trade-impacted labor markets, and increasing their participation in risky and damaging behaviors. As predicted by a simple model of marital decision-making under uncertainty, we document that adverse shocks to the supply of `marriageable' men reduce the prevalence of marriage and lower fertility but raise the fraction of children born to young and unwed mothers and living in in poor single-parent households. The falling marriage-market value of young men appears to be a quantitatively important contributor to the rising rate of out-of-wedlock childbearing and single-headed childrearing in the United States.

The four essays of this dissertation deal with different topics in microeconometrics, including model building, identifcation, and estimation.

Decades of classic economic research have neglected the role of incidental and integral emotional factors in human decision-making. Standard economic models assume that decision-making is consequentialist in nature: Decision-making is postulated to be guided by the decision maker’s rational assessment of desirability and likelihood of alternative outcomes, i.e., by his strive to maximize utility (Rick & Loewenstein, 2008). However, advances in psychology and behavioral economics led to the gradual acceptance of incidental and integral emotion-related forces on decision-making. Still, we particularly lack detailed insight into the neurobiological mechanisms of the interaction between emotion and decision-making.
The purpose of this dissertation was to gain a more detailed understanding of these neurobiological substrates of the modulatory effects of different emotion-related factors on decision-making. To this end, four studies investigated different aspects of this interaction with behavioral, neuroimaging and neurostimulation tools.
Study A employed transcranial magnetic stimulation in order to investigate the neurobiological mechanisms causally underlying the framing effect, a decision-making bias hypothesized to be based on the influence of integral emotion on the decision-making process. This study shows that temporal disruption of activity in unilateral dorsolateral prefrontal cortex, a brain region known for its involvement in cognitive control, does not lead to changes in framing susceptibility, and casts doubt on the essential role of this brain region in the framing effect.
In Study B, the effects of incidental anticipatory anxiety on risky decision-making in a non-social context were investigated. The results demonstrate that induced anxiety leads to significant changes in neural value coding (especially in insula, ventral striatum and ventromedial prefrontal cortex), without changes in observable behavior (i.e., choices).
Study C focused on the effects of incidental anticipatory anxiety on social decisionmaking. Anticipatory anxiety caused a breakdown in trusting behavior, which was correlated with activity and connectivity changes in neural social cognition networks (e.g., temporoparietal junction, posterior superior temporal sulcus). The results of Studies B and
C highlight the task- and context-specific effects of anxiety on behavioral and neural aspects of non-social and social risky decision-making.
Study D addressed the neuroanatomical substrate of emotion-related traits (i.e., personality and emotion-related traits) consistently found to influence daily decisionmaking.I found unique and specific associations between distinct affective and personality features such as impulsivity, sensation seeking, and negative emotionality and brain morphometry. Importantly, the identified brain regions have been shown to be (functionally and structurally) involved in decision-making and valuation. This finding emphasizes the association between affective and personality traits and variation in individual decisionmaking styles.
In sum, this dissertation contributes to a detailed understanding of the modulatory influence of emotion on decision-making. I present different neurofunctional and neurostructural correlates of emotion-decision-making interactions, which are highly taskdependent. Notably, these findings might offer a neurobiological account for deviant decision-making observed in numerous psychiatric disorders such as anxiety and affective disorders.