Berlin School of Economics Discussion Papers
Refine
Document Type
- Working Paper (43)
Language
- English (43)
Is part of the Bibliography
- no (43)
Keywords
- Economics (5)
- Coal, Oil Invasion, Education, Reinvention, Economic Growth (1)
- Decarbonizing road transport, electric mobility, purchase subsidies, policy effectiveness, distributional effects of climate policy (1)
- Evidence (1)
- Expectation Formation, Time perception, Sub-additivity, Super-additivity (1)
- Local provision of public goods (1)
- Mechanism Design (1)
- Parental leave, worker absences, worker substitutability (1)
- Population density, air pollution, gridded data (1)
- Revelation Principle (1)
41
We demonstrate how the incentives of firms that partially own their suppliers or customers to foreclose rivals depend on how the partial owner can extract profits from the target. Compared to a fully vertically integrated firm, a partial owner may obtain only a share of the target’s profit but influence the target’s strategy significantly. We show that the incentives for customer and input foreclosure can be higher, equal, or even lower with partial ownership than with a vertical merger, depending on how the protection of minority shareholders and transfer price regulations affect the scope for profit extraction.
40
Across industrialized countries, regional disparities in labor market outcomes and income have increased in recent decades. This paper investigates how one of the largest localized labor demand shocks tied to the beginning of de-industrialization- the decline of the mining industry between 1960 and 2010 - affects labor market outcomes in the long run. The analysis relies on a new panel data set based on digitized census records from Belgium, France, the UK, and Germany that allows to trace labor market adjustments over 60 years for the male and female working-age population separately. For the causal estimation, I use an IV-shift share approach that exploits exogenous variation in the shifts induced by increased seaborne trade of energy substitutes and the share given by geological rock strata to predict mining activity. The male population disproportionately suffered under this (early) de-industrialization shock and the subsequent job loss. For the male population, the employment-population ratio has not yet recovered resulting in persistent local joblessness. In contrast, the female working-age population experienced a strong catch-up in employment and participation. I find that at the aggregate level, a substantial, albeit time-lagged population response paired with a strong increase in female participation rates fully compensate for the loss of male jobs over the decades. As a consequence, the male-female employment gap shrinks over time.
39
Narrative Persuasion
(2024)
We study how one person may shape the way another person interprets objective information. They do this by proposing a sense-making explanation (or narrative). Using a theory-driven experiment, we investigate the mechanics of such narrative persuasion. Our results reveal several insights. First, narratives are persuasive: We find that they systematically shift beliefs. Second, narrative fit (coherence with the facts) is a key determinant of persuasiveness. Third, this fit-heuristic is anticipated by narrative-senders, who systematically tailor their narratives to the facts. Fourth, the features of a competing narrative predictably influence both narrative construction and adoption.
38
To accept carbon pricing, citizens desire viable alternatives to fossil-fuel based options. As inflation and higher interest rates have exacerbated access barriers for capital-intensive green substitutes, the political success of carbon pricing will be measured by how well policy design enables consumers to switch.
37
This chapter presents a microeconomic, behavioral perspective on bounded rationality and beliefs. It begins with an account of how research on belief biases, in particular via probabilistic belief elicitation, has become mainstream in economics only relatively recently and late, even in behavioral economics (aka “psychology and economics”). The chapter then offers a review of the decision-theoretic foundations of modeling and eliciting (subjective) beliefs as probabilities, as well as selected—both classic and recent—evidence on humans’ bounded rationality from related research in psychology and economics. In doing so, it connects the historical debates within decision theory, on the one hand, and within psychology, on the other, concerning the normative status of expected utility and Bayesianism, as well as its methodological implications. A conclusion draws lessons for the practice of belief elicitation and future research.
36
While psychotherapy has been shown to be effective in treating depression, take-up remains low. In a sample of 1,843 depressed individuals, we document that effectiveness concerns are top-of-mind when respondents consider the value of therapy. We then show that the average respondent underestimates the effectiveness of therapy and that an information treatment correcting this misperception increases participants’ incentivized willingness to pay for therapy. Information affects therapy demand by changing beliefs rather than by shifting attention. Our results suggest that information interventions that target the perceived effectiveness of therapy are a potent tool in combating the ongoing mental health crisis.
35
This paper studies a key element of discrimination, namely when stereotypes translate into discriminatory actions. Using a hiring experiment, we rule out taste-based discrimination by design and test for the presence of two types of belief-based gender discrimination. We document evidence of explicit discriminators—individuals who are willing to discriminate even when their hiring choices are highly revealing of their gender-biased beliefs. Crucially, we also identify implicit discriminators—individuals who do not discriminate against women when taking a discriminatory action is highly revealing of their biased beliefs, but do discriminate against women when their biased motive is obscured. Our analysis highlights the central role played by features of the choice environment in determining whether and how discrimination will manifest. We conclude by discussing the implications for policy design.
35
This paper studies a key element of discrimination, namely when stereotypes translate into discriminatory actions. Using a hiring experiment, we rule out taste-based discrimination by design and test for the presence of two types of belief-based gender discrimination. We document evidence of explicit discriminators—individuals who are willing to discriminate even when their hiring choices are highly revealing of their gender-biased beliefs. Crucially, we also identify implicit discriminators—individuals who do not discriminate against women when taking a discriminatory action is highly revealing of their biased beliefs, but do discriminate against women when their biased motive is obscured. Our analysis highlights the central role played by features of the choice environment in determining whether and how discrimination will manifest. We conclude by discussing the implications for policy design.
34
How do households perceive the forecasting performance of the central bank? Using two novel experiments embedded in the Bundesbank's Survey on Consumer Expectations (total $N=9500$), this article shows that the majority of German households underestimate the ECB's inflation forecasting accuracy. In particular, they believe that the ECB is overly optimistic. Communication that challenges these perceptions improves the anchoring of inflation expectations, reduces inflation uncertainty and discourages consumption of durable goods. Treated households also report higher trust in the ECB, perceive the ECB's inflation target as more credible, the ECB's communication as more honest, and the ECB's policy as more beneficial to them. Finally, the causal effect of central bank trust on inflation expectations is quantified using instruments to deal with endogeneity.
33
The Political Economy of Stranded Assets: Climate Policies, Investments and the Role of Elections
(2024)
We study the interaction of climate policies and investments into fossil and renewable energy generation capacity if policies are set by democratically elected governments and can lead to stranded assets. We develop an overlapping generations model, where elections determine carbon taxation and green investment subsidies, and individuals make investments into fossil and renewable capacity. We find that some fossil investments become stranded assets, if the party offering the higher carbon tax is unexpectedly elected. In contrast, if the individuals have perfect foresight, there are no stranded assets, climate damages are fixed and carbon taxation only serves redistributive purposes. Then, there is either no or prohibitive carbon taxation and energy generation completely relies on renewables in the latter case. Green investment subsidies can be used by governments to bind the hands of their successor. If the party representing the young generation is in power, it can use a high subsidy to reduce or even avoid potentially stranded assets in the next period. With endogenous reelection probability, we show that this party can also use investment subsidies strategically to influence the elections. The party that represents the old generation abstains from both types of climate policies to avoid a redistribution of income towards the young generation.