|10.04.2019||Jan Bena, University of British Columbia|
|Shielding Firm Value: Employment Protection and Process Innovation |
We show that an increase in labor dismissal costs leads firms to increase their process innovation, especially in industries with a large share of labor costs. Firms with a greater stock of knowledge capital adjust their production methods and mitigate the effects of increased labor rigidity. They exhibit larger increases in process innovation, larger decreases in employment and employment growth rates, and larger increases in capital intensity. These adjustments allow them to increase labor productivity, operating performance, and ultimately to avoid value losses.
|24.04.2019||Tim Eisert, Erasmus School of Economics Rotterdam|
|Credit Misallocation and (Dis-) Inflation: Evidence from Europe (with Viral Acharya, Matteo Crosignani, and Christian Eufinger) |
The European economy has been recently characterized by near-zero inflation and an extraordinarily accommodative monetary policy. Motivated by this evidence, we show that, in an environment with poorly capitalized banks, low policy rates can have a negative effect on inflation. In a stylized model, we show that low policy rates help low-capital banks extend extra credit to weak firms in order to prevent them from defaulting (“zombie” lending). The resulting low firm default rate increases competition that, in turn, has a negative effect on product prices. We test our mechanism exploiting firm-level data from twelve European countries. After confirming that subsidized credit to weak firms has dramatically increased since 2012, we find that, in the cross-section of industries and countries, an increase in the share of zombie firms is associated with a decrease of markups, prices, and firm entries and defaults, while aggregate sales increase. Our results hold at the firm-level and are stronger for non-tradable products, more affected by local credit markets.
|15.05.19||Jan Marcus, Universität Hamburg|
|Start: 18:00||Sports Club Vouchers and Children’s Health Behavior |
This paper evaluates the effect of taxpayer-subsidized free sports club memberships on awareness, take-up rates, physical activity and health among primary school children. In 2009, along with an information campaign, the German state of Saxony distributed about 30,000 membership vouchers among third and fourth graders to induce primary school children to become sport club members and nudge them into a long-term habit of exercising regularly. We carried out a unique survey among this target group in Saxony and neighboring states in 2018. Our findings show that awareness of the voucher program clearly increased due to the campaign and that children actually received and used the vouchers. However, we find no significant short- or long-term impact on sports-club enrollment or physical activity among previously inactive students. Contrarily, we find strong evidence that it was a windfall gain for parents of physically active students as they primarily redeemed the vouchers. Consistently, we find no significant impact on self-reported or objective health and health behavior measures.
|05.06.2019||Heiko Jacobs, Universität Duisburg-Essen|
|Aggregating Anomalies |
I evaluate the performance of several composite mispricing approaches aiming at synthesizing the information of the 380 individual cross-sectional anomalies in my global sample. Relative to the typical anomaly, aggregation techniques on average quadruple abnormal return predictability, both in the U.S. and nine large international stock markets. Mispricing also appears to be pronounced among large stocks, in the recent past, constructed from published anomalies only, or benchmarked against recently proposed asset pricing models. In sum, my findings suggest that cross-sectional return predictability is unlikely to be spurious and that global stock markets may be less efficient than widely thought.
|12.06.2019||Rainer M. Rilke, WHU-Otto Beisheim School of Management|
|Peer selection and performance - Evidence from a field experiment |
We investigate whether the mechanism by which peers are assigned influences students' educational performance. In a business school class, work groups are either endogenously formed or assigned randomly. During the semester, groups have to work on two tasks that contribute to their final grade. Results from the first wave show that group performance is significantly better when groups are assigned randomly. When groups are formed endogenously, students more often match with students of similar ability, of the same gender, and with whom they knew before. Moreover, we observe a positive relationship between one's pro-sociality and ability of one's match but no assortative matching on pro-sociality. Individual exam performance is not significantly different between endogenously and randomly matched students.
|26.06.2019||Edgar Preugschat, TU Dortmund|
|Regional labor mobility and optimal taxation|
|03.07.2019||Stephan Müller, Georg-August-Universität Göttingen|
|The Evolution of Morals under Indirect Reciprocity |
We study the coexistence of strategies in the indirect reciprocity game where agents have access to second-order information. We fully characterize the evolutionary stable equilibria and analyze their comparative statics with respect to the cost-benefit ratio (CBR). There are indeed only two stable sets of equilibria enabling cooperation, one for low CBRs involving two strategies and one for higher CBR's which involves two additional strategies. We thereby offer an explanation for the coexistence of different moral judgments among humans. Both equilibria require the presence of second-order discriminators which highlights the necessity for higher-order information to sustain cooperation through indirect reciprocity. In a laboratory experiment, we find that more than 75% of subjects play strategies that belong to the predicted equilibrium set. Furthermore, varying the CBR across treatments leads to changes in the distribution of strategies that are in line with theoretical predictions.
|10.07.2019||Nicolas Klein, University of Montreal|
|Overcoming Free-Riding in Bandit Games (with Johannes Hörner and Sven Rady) |
We analyze the continuous-time limit of a discrete-time experimentation game with Lévy bandits. We show that free-riding can be mitigated or even completely overcome in non-Markovian equilibria. If players’ payoffs have an informative diffusion component, efficiency can be asymptotically achieved in perfect Bayesian equilibrium. Otherwise, asymptotic efficiency is possible if and only if lump-sum payoffs are not too informative about the state of the world. In all cases, it is asymptotically without loss to focus on strongly symmetric equilibria as far as average payoffs are concerned.