Contributions published at Department of Economics (Florian Scheuer)

We examine international regulatory agreements that are negotiated under lobbying pressures from producer groups. The way in which lobbying influences the cooperative setting of regulatory policies, as well as the welfare impacts of international agreements, depend crucially on whether the interests of producers in different countries are aligned or in conflict. The former situation tends to occur for product standards, while the latter tends to occur for process standards. We find that, if producer lobbies are strong enough, agreements on product standards lead to excessive deregulation and decrease welfare, while agreements on process standards tighten regulations and enhance welfare.

We use a quantitative economic geography model to explore subsidy competition among U.S. states. We ask what motivates state governments to subsidize firm relocations and quantify how strong their incentives are. We also characterize fully non-cooperative and cooperative subsidy choices and assess how far away we are from these extremes. We find that states have strong incentives to subsidize firm relocations in order to gain at the expense of other states. We also find that observed subsidies are closer to cooperative than non-cooperative subsidies but the potential losses from an escalation of subsidy competition are large.

Using a large-scale real effort experiment, we explore whether and how different peer assignment mechanisms affect worker performance and stress. Letting individuals choose whom to compare to increases productivity to the same extent as a targeted exogenous matching policy designed to maximize motivational spillovers. These effects are significantly larger than those obtained through random assignment and their magnitude is comparable to the impact of monetary incentives that increase pay by about 10 percent. A downside of targeted peer assignment is that, unlike endogenous peer selection, it leads to a large increase in stress. Using a combination of choice data, text analysis and simulations, we show that the key advantage of letting workers choose whom to compare to is that it allows those workers who want to be motivated to compare to a motivating peer while also permitting those for whom social comparisons have little benefits or are too stressful to avoid them. Finally, we provide evidence that social comparisons yield stronger motivational effects than comparable non-social goals.

When does collective memory influence behavior? We highlight two conditions under which the memory of past events comes to matter for the present: the associative nature of memory and institutionalized acts of commemoration by the state. During World War II, German troops occupying Greece perpetrated numerous massacres. Memories of those events resurfaced during the 2009 Greek debt crisis, leading to a drop in German car sales in Greece, especially in areas affected by German reprisals. Differential economic performance did not drive this divergence. Multiple pieces of evidence suggest that current events reactivated past memories, creating a backlash against Germany. This backlash also manifested in political behavior, with vote shares of anti-German parties increasing in reprisal areas after the start of the debt crisis. Using quasi-random variation in public recognition of victim status, we show that institutionalized collective memory amplifies the effects of political conflict on economic and political behavior.

This article presents new estimates of wages for Normandy between 1600 and 1850. We use a vast array of primary and secondary sources to assemble two new databases on wages and commodity prices to establish a new regional consumer price index (CPI) and twelve regional wage series. We find that unskilled labourers earned similar wages across the agricultural, maritime, and textile sectors. Historical evidence suggests that Norman employers grappled with a tight labour market, which placed more pressure on wage increases. We posit that this situation is best explained by the combination of the early fertility transition, resulting in slow demographic growth and the rapid development of the textile industry accelerated by the arrival of cotton. Finally, we also provide tentative evidence suggesting that labourers with stable employment could have earned a little less than their English counterparts during this period.

As pointed out by Sion and Wolfe (1957), a non-cooperative game on the unit square need not admit a Nash equilibrium, neither in pure nor in randomized strategies. In this paper, we consider finite approximations of the Sion-Wolfe game. For all parameter constellations relevant for the limit consideration, we characterize the set of Nash equilibria in iteratively undominated strategies. Values of finite approximations of the Sion-Wolfe game are shown to accumulate around three values that do not correspond in a simple way to the majorant and minorant values of the continuous game. To understand why this is happening, we apply the iterated elimination of weakly dominated strategies to the continuous game as well. The existence of ε-equilibrium, however, does not seem to be related to the properties of finite approximations.

Increasing inequality and associated egalitarian sentiments have put redistribution on the political agenda. In this paper, we take advantage of Swiss direct democracy, where people voted several times on strongly redistributive policies in national plebiscites, to study the link between social preferences and a behaviorally validated measure of support for redistribution in a broad sample of the Swiss population. Using a novel nonparametric Bayesian clustering algorithm, we uncover the existence of three fundamentally distinct preference types in the population: predominantly selfish, inequality averse and altruistic individuals. We show that inequality averse and altruistic individuals display a much stronger support for redistribution, particularly if they are more affluent. In addition, we show that previously identified key motives underlying opposition to redistribution – such as the belief that effort is an important driver of individual success – play no role for selfish individuals but are highly relevant for other-regarding individuals. Finally, while inequality averse individuals display strong support for policies that primarily aim to reduce the incomes of the rich, altruistic individuals are considerably less supportive of these policies. Thus, knowledge about the qualitative properties of social preferences and their distribution in the population also provides insights into which preference type supports specific redistributive policies, which has implications for how policy makers may design redistributive packages to maximize political support for them.

We examine a stochastic growth process that can alternatively be interpreted as a model of economic growth, financial portfolio management, statistical inference, or biological population growth. For the economic interpretation, we find that the growth-maximizing policy satisfies a meritocracy principle: it minimizes the discrepancy between the resource shares allocated to the agents and the agents' ``merits.'' For the statistical interpretation, the setting is equivalent to a model of predictive coding, in which a misspecified system maximizes the fit of data. A consistency principle analogous to the meritocracy principle requires the optimal fit to minimize a degree of Bayes inconsistency.

Armut, Kindersterblichkeit und andere Übel haben in den letzten 30 Jahren enorm abgenommen. Aber wie lange noch?

Life course epidemiology seeks to understand the intricate relationships between risk factors and health outcomes across different stages of life to inform prevention and intervention strategies to optimize health throughout the lifespan. However, extant evidence has predominantly been based on separate analyses of data from individual birth cohorts or panel studies, which may not be sufficient to unravel the complex interplay of risk and health across different contexts. We highlight the importance of a multi-study perspective that enables researchers to: (a) Compare and contrast findings from different contexts and populations, which can help identify generalizable patterns and context-specific factors; (b) Examine the robustness of associations and the potential for effect modification by factors such as age, sex, and socioeconomic status; and (c) Improve statistical power and precision by pooling data from multiple studies, thereby allowing for the investigation of rare exposures and outcomes. This integrative framework combines the advantages of multi-study data with a life course perspective to guide research in understanding life course risk and resilience on adult health outcomes by: (a) Encouraging the use of harmonized measures across studies to facilitate comparisons and synthesis of findings; (b) Promoting the adoption of advanced analytical techniques that can accommodate the complexities of multi-study, longitudinal data; and (c) Fostering collaboration between researchers, data repositories, and funding agencies to support the integration of longitudinal data from diverse sources. An integrative approach can help inform the development of individualized risk scores and personalized interventions to promote health and well-being at various life stages.

The rise of opinion programs has transformed television news. Because they present anchors’ subjective commentary and analysis, opinion programs often convey conflicting narratives about reality. We experimentally document that people across the ideological spectrum turn to opinion programs over “straight news”, even when provided large incentives to learn objective facts. We then examine the consequences of diverging narratives between opinion programs in a high-stakes setting: the early stages of the COVID-19 pandemic in the US. We find stark differences in the adoption of preventative behaviours among viewers of the two most popular opinion programs, both on the same network, which adopted opposing narratives about the threat posed by the COVID-19 pandemic. We then show that areas with greater relative viewership of the program downplaying the threat experienced a greater number of COVID-19 cases and deaths. Our evidence suggests that opinion programs may distort important beliefs and behaviours.

Widespread evidence from psychology and neuroscience documents that previous choices unconditionally increase the later desirability of chosen objects, even if those choices were uninformative. This is problematic for economists who use choice data to estimate latent preferences, demand functions, and social welfare. The evidence on this mere choice effect, however, exhibits serious shortcomings which prevent evaluating its possible relevance for economics. In this paper, we present a novel, parsimonious experimental design to test for the economic validity of the mere choice effect addressing these shortcomings. Our design uses well-defined, monetary lotteries, all decisions are incentivized, and we effectively randomize participants’ initial choices without relying on deception. Results from a large, pre-registered online experiment find no support for the mere choice effect. Our results challenge conventional wisdom outside economics. The mere choice effect does not seem to be a concern for economics, at least in the domain of decision making under risk.

Group-based identities are an important basis of political competition. Parties appeal consciously to specific social groups and these group-based appeals often improve the evaluation of parties and candidates. Studying place-based appeals, we advance the understanding of this strategy by distinguishing between dominant and subordinate social groups. Using two survey experiments in Germany and England, we show that group appeals improve candidate evaluation among subordinate (rural) voters. By contrast, appeals to the dominant (urban) group trigger a negative reaction. While urban citizens’ weaker local identities and lower place-based resentment partly explain this asymmetry, they mainly dislike group-based appeals because of their antagonistic nature. If the same policies are framed as benefiting urban and rural dwellers alike, candidate evaluation improves. Thus, people on the dominant side of a group divide reject a framing of politics as antagonistically structured by this divide, even if they identify with the dominant group.

Blacklisting is a widespread and controversial instrument designed to induce tax havens to change their domestic policies. Since the Global Financial Crisis, several international organizations like the OECD and the EU have published tax haven blacklists, but these lists have been widely criticized as a flawed policy tool. In this paper, we use a mixed methods approach to explore the political rationale behind the establishment of the EU blacklist, and the causal mechanisms through which the list was expected to exert influence over governments in tax havens. First, we draw on process-tracing and expert interviews to establish that the list was less designed as an effective policy tool to induce compliance with international standards, and more as a political impetus to shape the overall problem definition, strengthen the Commissions bargaining position, and influence public opinion. Second, we conduct a survey experiment in Switzerland to determine if using a blacklist to name-and-shame and threaten economic sanctions can effectively shape public opinion in a low-tax jurisdiction. We find that “naming-and-shaming” and “economic threat” have a statistically significant effect on public opinion in favor of tax reform, but that this effect is modest.

What is the impact of the oral contraceptive pill on the mental health of adolescent girls? Using administrative data from Denmark and exploiting the variation in the timing of pill initiation in an event study design, we find that the likelihood of a depression diagnosis and antidepressant use increases shortly after pill initiation. We then uncover substantial variation in primary care providers' tendency to prescribe the pill to adolescents, unrelated to patient characteristics. Being assigned to a high prescribing physician strongly predicts pill use by age 16 and leads to worse mental health outcomes between ages 16-18.

The article focuses on the power of intuition or gut instincts and how they can be misleading or dangerous when applied in the wrong situation. It explains that intuition works well with familiarity, reinforcement or imitation, that is when faced exactly the same decision repeatedly. It cites that successful intuitive behavior is associated with expertise as the brain has been exposed to a lot of information and has internalized a series of subtle associations.

We study extensive‐form games and mechanisms allowing agents that plan for only a subset of future decisions they may be called to make (the planning horizon). Agents may update their so‐called strategic plan as the game progresses and new decision points enter their planning horizon. We introduce a family of simplicity standards which require that the prescribed action leads to unambiguously better outcomes, no matter what happens outside the planning horizon. We employ these standards to explore the trade‐off between simplicity and other objectives, to characterize simple mechanisms in a wide range of economic environments, and to delineate the simplicity of common mechanisms such as posted prices and ascending auctions, with the former being simpler than the latter.

Voluntary attention supports dietary self-control, while hedonic appetite impairs it. However, hedonic processing of foods consumes voluntary attention. We therefore checked whether the interaction between hedonic appetite and attentional abilities is associated with poorer dietary self-control. Using the Power of Food Scale (PFS) we measured hedonic appetite in two samples of young adults living in cities. In Study 1 (380 participants) poor dietary self-control and attentional abilities were measured by the Uncontrolled Eating subscale of Three-Factor Eating Questionnaire and the Attentional Control Scale, respectively. In Study 2, 49 participants rated the healthiness and tastiness of foods. In the incentivized series of computerized trials, dietary self-control was defined as choosing a healthier over a tastier food item. Attentional abilities were computed as the ratio of mean to standard deviation of response time in a memory task check (a presented digit was checked against a memorized digit). The interaction between the PFS and attentional abilities was associated with poorer dietary self-control (Studies 1–2). The strength of the positive association between attentional abilities and self-control decreased with a PFS score, with no association (Study 1) and the negative association (Study 2) for high-PFS individuals. The strength of the negative association between the PFS and dietary self-control increased with attentional abilities, with no association for individuals with low attentional abilities in Study 2. The interplay between attentional skills and hedonic appetite can be harmful for dietary self-control in young adults. If hedonic appetite is strong enough, attentional abilities may be unfavorable for dietary self-control.

This chapter presents an overview of methodological developments that attempt to deal with the fundamental problem as to what common 'true' brain state may underlie the method-specific observations. All of these developments focus on combinations of existing methods from the present armory of cognitive neuroscientists, an approach often referred to as multimodal imaging. The chapter discusses three such combinations: functional magnetic resonance imaging (fMRI)–electroencephalography (EEG)/magnetoencephalography (MEG), noninvasive brain stimulation (NIBS)-EEG, and NIBS-fMRI. The chapter begins with a brief description of the basic mechanisms of action for EEG/MEG, fMRI, and NIBS. It outlines only the strengths and shortcomings of each technique to motivate their multimodal combination. The chapter also describes the three multimodal combinations in detail. It presents the general rationale of each approach, gives a brief outline of technical considerations, and discusses the unique insights that can be gained with the particular methodical combination by means of illustrative studies.

Sensory information encoded by humans and other organisms is generally presumed to be as accurate as their biological limitations allow. However, perhaps counterintuitively, accurate sensory representations may not necessarily maximize the organism’s chances of survival. To test this hypothesis, we developed a unified normative framework for fitness-maximizing encoding by combining theoretical insights from neuroscience, computer science, and economics. Behavioural experiments in humans revealed that sensory encoding strategies are flexibly adapted to promote fitness maximization, a result confirmed by deep neural networks with information capacity constraints trained to solve the same task as humans. Moreover, human functional MRI data revealed that novel behavioural goals that rely on object perception induce efficient stimulus representations in early sensory structures. These results suggest that fitness-maximizing rules imposed by the environment are applied at early stages of sensory processing in humans and machines.