|26.04.2017||Christian Seel, Maastricht University|
The Myopic Stable Set for Social Environments (with T. Demuynck, J.-J. Herings, R. D. Saulle)
We introduce a new solution concept for models of coalition formation, called the myopic stable set. The myopic stable set is defined for a very general class of social environments and allows for an infinite state space. We show that the myopic stable set exists and is non-empty. Under minor continuity conditions, we also demonstrate uniqueness. Furthermore, the myopic stable set is a superset of the core and of the set of pure strategy Nash equilibria in noncooperative games. Additionally, the myopic stable set generalizes and unifies various results from more specific environments. In particular, the myopic stable set coincides with the coalition structure core in coalition function form games if the coalition structure core is non-empty; with the set of stable matchings in the standard one-to-one matching model; with the set of pairwise stable networks and closed cycles in models of network formation; and with the set of pure strategy Nash equilibria in finite supermodular games, finite potential game , and aggregative games. We illustrate the versatility of our concept by characterizing the myopic stable set in a model of Bertrand competition with asymmetric costs, for which the literature so far has not been able to fully characterize the set of all (mixed) Nash equilibria.
|03.05.2017||Peter Katuscak, RWTH Aachen|
How to Boost revenues in First-Price Auctions? The Magic of Disclosing Only Winning Bids from Past Auctions
We present an experiment to evaluate revenue implications of two disclosure policies available to a long-run auctioneer: disclosure of all bids from past auctions and disclosure of winning bids only. Using a first-price auction with two bidders, we find that disclosing the winning bids leads to higher bids and revenues in the long run. We propose to explain this finding by allowing a share of bidders to be naive in that, when presented with historical winning bids, they mistakenly best-respond to that distribution, failing to realize that winning bids are not representative of all bids. We also develop a method to estimate the fraction of naive bidders in a between-subject design and to relate it to the degree of bidders' risk aversion. Our findings challenge the predictive power of the Bayesian Nash equilibrium based on full bidder rationality, and they underline the selection of historical price information as a key market design choice.
|10.05.2017||Menusch Khadjavi, Christian-Albrechts-University Kiel|
Professional Identity and the Gender Gap in Risk-Taking. Evidence from a Field Experiment with Scientists (with Moritz A. Drupp, Marie-Catherine Riekhof and Rudi Voss)
The gender gap in risk-taking is often used to explain differences in labor market outcomes. Some studies, however, suggest that this gender gap does not extend to professional contexts. This paper examines potential drivers of the gender gap in risk-taking, comparing the professional context of academia to a private setting. We draw on identity economics, which posits that individuals form multiple identities that moderate behavior across contexts. In an online field experiment with 474 scientists we vary the salience of the professional or private identity. We find that the gender gap in risk-taking is mediated when the professional identity is salient. We identify the switching of identities by females as an explanation. Our results suggest that if the gender gap in risk-taking is driven by selection, the selection is not (only) along risk-aversion, but (also) along the ability to switch between identities and to adapt to prevailing norms. This provides new insights for the discussion on gender, risk-taking and labor market policies, and suggests an important role for mentoring programs.
|17.05.2017||Thomas Volling, FernUni Hagen|
Energy-oriented scheduling of identical parallel machines considering a two-part tariff system
We propose a mathematical model (MILP) for the energy-oriented scheduling problem with identical parallel machines. The model considers time-dependent labor costs and costs for electric energy while simultaneously determining optimal job assignments, job sequences and machine operation modes. A two-part energy contract is assumed, consisting of time-varying energy rates as well as a rate that is charged depending on the peak load. We present results of an application-oriented numerical example comparing the performance of the model with a conventional scheduling approach minimizing labor costs. The results indicate that under a wide range of conditions significant cost reductions can be achieved. The potential is especially pronounced, if the degree of capacity utilization is low to medium and job durations are short.
|Der Vortrag von David Wood findet am 07.06.2017 um 12:00 Uhr im Raum LC 134 statt.|
|07.06.2017||David Wood, Brigham Young University|
|12:00 Uhr, LC 134|
The Association between Internal Audit Consulting Services and Firm Performance
In this paper, we examine whether operations-relevant consulting services (OCS) provided by the internal audit function (IAF) bring economic benefits to firms. Using a sample constructed by matching a global internal auditor survey with public firms’ data in Compustat, we find that the extent of OCS provided by the IAF has a significant positive association with operating performance. This result is robust to multiple sensitivity tests. In addition, a DuPont Analysis reveals that OCS provided by the IAF are associated with a higher asset turnover ratio and greater operating profit margin but not related to the equity multiplier. Moreover, the positive relation between OCS and operating performance is only achieved for companies that follow a defender (as opposed to a prospector) business strategy. Finally, we find that extensively outsourcing internal audit activities reduces the positive effect of OCS on operating performance. Our findings shed light on the current debate about the value added by the IAF.
|21.06.2017||Alexander Braun, Universität St. Gallen|
|Asset Pricing and Extreme Event Risk: Common Factors in ILS Fund Returns (with S. Ben Ammar and M. Eling)|
Investment funds specializing in insurance-linked securities (ILS) exhibit zero-R-squareds under traditional factor models. We introduce a new perils-based approach, which explains their time-series and cross-sectional return variation. Despite a strong overall fit, we are left with significantly positive alphas for about one quarter of the funds, some of which can be attributed to beta exposures associated with non-cat-bond ILS. In addition, they are related to fund size, fund age, and performance fees. Although we do not find evidence for market timing abilities, we can rule out pure luck as the source of outperformance by controlling for false discoveries.
|28.06.2017||Christof Backhaus, Aston Business School|
|Reward Redemption in Loyalty Programs|
Given the substantial level of points accumulated in customer loyalty program accounts, reward redemption is a crucial and, at the same time, controversial topic for loyalty program providers. Financially, exchanging points against rewards directly affects the bottom line. From a marketing perspective, however, loyalty point redemption might positively affect behavioral loyalty, such that companies should have a genuine interest in stimulating reward redemption. Our study sheds light on redemption behavior and its consequences in terms of behavioral loyalty of customers. Applying propensity score matching to a large sample of customers of an airline loyalty program, the analysis shows that customers who have redeemed their reward miles do behave with more loyalty than otherwise comparable customers who have not. Implications derived from the study can help loyalty program managers to manage the reward redemption process more efficiently.
|05.07.2017||Oliver Falck, Ludwig-Maximilians-Universität München|
Returns to ICT Skills (with Alexandra Heimisch and Simon Wiederhold)
How important is mastering information and communication technology (ICT) in modern labor markets? We answer this question with unique data on ICT skills tested in 19 countries. Our two instrumental-variable models exploit technologically induced variation in broadband Internet availability that gives rise to variation in ICT skills across countries and German municipalities. We find that a one-standard-deviation increase in ICT skills raises earnings by about 25 percent. Exogenous broadband availability cannot explain numeracy or literacy skills, suggesting that estimated returns are unaffected by general ability. One mechanism driving positive returns is selection into occupations with high abstract task content.
|12.07.2017||Raffaele Fiocco, Universitat Rovira i Virgili|
|Strategic inventories under limited commitment (with F. Antoniou)|
In a dynamic storable good market where demand changes over time, we investigate the producer's strategic incentives to hold inventories in response to the possibility of buyer stockpiling. The literature on storable goods has demonstrated that buyer stockpiling in anticipation of higher future prices harms the producer's profitability, particularly when the producer cannot commit to future prices. We show that the producer holds inventories as a strategic device to mitigate the loss from the lack of commitment. In an environment that allows for buyer stockpiling, our results provide a rationale for the producer's inventory behavior that sheds new light on the well-documented empirical evidence about inventories.
|19.07.2017||Simeon Schudy, Ludwig-Maximilians-Universität München|
|Incentivizing Complex Problem Solving in Teams - Evidence from a Field Experiment (with Stefan Grimm, David Schindler and Florian Englmaier)|
We study the role of bonuses, framed as gains and losses, in a unique environment that closely resembles many features of modern working environments: team work, knowledge re-combination and creative problem solving. We conduct a field experiment in cooperation with a provider of real life escape games. Bonuses significantly increase team performance in the field experiment whereas framing the bonus as a loss does not yield additional benefits as compared to the gain frame. We qualitatively replicate these findings with student participants in a lab-in-the field experiment that allows to study potential mechanisms underlying the productivity increase. Our findings suggest that the productivity increase among student participants result from two sources: First, single team members tend to become more dominant and to take more often the initiative. Second, bonuses induce "cutting corners" behavior among student participants. In contrast, teams in field experiment, who self-selected into the task, improve performance under bonus incentives without cutting corners more frequently. We discuss the implications of our findings for managers and firms designing contract structures in modern working environments.
|26.07.2017||Deniz Dizdar, University of Montreal|
|11:15 Uhr, LB 137|
Uncertainty and Investment Incentives in Matching Contests
Agents in a finite two-sided market make costly investments and are then matched assortatively on the basis of these investments. Investments serve to signal complementary, privately known types, but they also generate inalienable benefits for partners. We provide a quantitative characterization of how the numbers of ex-ante symmetric agents on both sides of this matching contest affect agents' uncertainty regarding the return to increasing their investment, and hence the investments made in Bayes-Nash equilibrium. For cases where investments are productive, we show how the numbers of agents affect the extent of hold-up problems. We also characterize the asymptotic behavior of equilibrium payoffs in large matching contests, for situations where investments are partially wasteful or correspond to monetary transfers.