Unternehmer braucht das Land, sagt der Ökonom Fabrizio Zilibotti: Sie sorgen
für Innovationen und wirtschaftliche Entwicklung. Zilibotti erforscht den Esprit
des Unternehmertums und wie dieser weitergegeben wird.
Since time immemorial, parents have struggled with the question of how best to raise their children. This column argues that the choice of parenting style is driven by incentives. Parents weigh the expected costs and benefits of implementing a certain parenting style. The popularity of the authoritarian style is declining because the economic returns to the independence of children have risen. The rising inequality implies higher returns to education. This calls for pushier parenting styles, such as the authoritative one. A decline in inequality is likely to prompt a more relaxed parenting.
How does an ex-ante contract affect behavior in an ex-post renegotiation game? We address this question in a canonical buyer–seller relationship with renegotiation. Our paper provides causal experimental evidence that an initial contract has a highly significant and economically important
impact on renegotiation behavior that goes beyond the effect of contracts on bargaining threat points. We compare situations in which an initial contract is renegotiated to strategically equivalent bargaining situations in which no ex-ante contract was written. The ex-ante contract causes sellers to ask for markups that are 45% lower than in strategically equivalent bargaining situations without an
initial contract. Moreover, buyers are more likely to reject given markups in renegotiations than in negotiations. These effects do not depend on whether the contract was written under competitive or monopolistic conditions. Our results provide strong evidence supporting the hypothesis that contracts serve as reference points that shape and coordinate the expectations of the contracting parties.
We show that professional soccer players and their coaches exhibit reference-dependent behavior during matches. Controlling for the state of the match and for unobserved heterogeneity, we show on a minute-by-minute basis that players breach the rules of the game, measured by the referee's assignment of cards, signifcantly more often if their teams are behind the expected match outcome, measured by pre-play betting odds of large professional bookmakers. We further show that coaches implement signifcantly more offensive substitutions if their teams are behind
expectations. Both types of behaviors impair the expected ultimate match outcome of the team, which shows that our fndings do not simply reflect fully rational responses to referencedependent incentive schemes of favorite teams to falling behind. We derive these results in a data set that contains more than 8'200 matches from 12 seasons of the German Bundesliga and 12 seasons of the English Premier League.
We recently assessed the (possible) effect of plain packaging on the smoking behaviour of young Australian individuals (aged 14–17 years). Our conclusion was that there is no evidence that plain packaging has lowered smoking prevalence among young Australians.
Most models of ambiguity aversion satisfy Anscombe-Aumann’s Monotonicity axiom. This paper proposes a test of Monotonicity, the Allais Horse Race. It is an adaptation of the Allais paradox to a setting with both subjective and objective uncertainty. Viewed as a thought experiment, the Allais Horse Race allows for introspective assessment of Monotonicity. Imple- menting it as an incentivized experiment, we find that the modal choice of subjects violates Monotonicity in a specific, intuitive way. Overall, we find that models of ambiguity aversion that satisfy Monotonicity cannot describe the behavior of about half of all subjects.
This paper analyzes the design of innovation contests when the quality of an innovation depends on the research approach of the supplier, but the best approach is unknown. Diversity of approaches is desirable because it generates an option value. In our main model with two suppliers, the buyer optimally uses a bonus tournament, where suppliers can choose between a low bid and a high bid. This allows the buyer to implement any level of diversity with the lowest revenue for the suppliers. We also compare other common contests, in particular, fixed-prize tournaments and auctions. Like bonus tournaments, auctions implement the socially optimal diversity, but usually with higher rents for the suppliers. Fixed-prize tournaments implement insufficient diversity, but may nevertheless be preferred by the buyer to auctions because of lower supplier rents.
This paper shows how asymptotically valid inference in regression models based on the weighted least squares (WLS) estimator can be obtained even when the model for reweighting the data is misspecified. Like the ordinary least squares estimator, the WLS estimator can be accompanied by heteroskedasticity-consistent (HC) standard errors without knowledge of the functional form of conditional heteroskedasticity. First, we provide rigorous proofs under reasonable assumptions; second, we provide numerical support in favor of this approach. Indeed, a Monte Carlo study demonstrates attractive finite-sample properties compared to the status quo, in terms of both estimation and inference.
Extracts of this paper were presented at the conference "Work Beyond 60: Preparing for the Demographic Shock", 6–7 March 2003 in Vienna organized by The Geneva Association, The Club of Rome, and The Risk Institute. Parts were also presented at the Bertelsmann Foundation conference "Strategien gegen den Fachkräftemangel" in Berlin, 2 July 2002 and at the Bertelsmann Foundation conference "Reformen zur Steigerung der Beschäftigungsfähigkeit älterer Arbeitskräfte" in Berlin, 26 October 2001. The authors would like to thank the participants as well as Jaap van Dam, Thomas Liebig, Fred Henneberger, and Geneviève Reday-Mulvey for their valuable comments and discussions. Alfonso Sousa-Poza would like to thank the Swiss National Science Foundation for financial assistance. The usual disclaimer applies.
