Delia Coculescu, Freddy DELBAEN, Fairness principles for insurance contracts in the presence of default risk, Mathematical Finance, Vol. 32 (2), 2022. (Journal Article)
 
We use the theory of cooperative games for the design of fair insurance contracts. An insurance contract needs to specify the premium to be paid and a possible participation in the benefit (or surplus) of the company. We suppose a convex commonotonic premium functional is used to value the aggregated liability of the insurance company. It results from the analysis that when a contract is exposed to the default risk of the insurance company, ex-ante equilibrium considerations require a certain participation in the benefit of the company to be specified in the contracts. The fair benefit participation of agents appears as an outcome of a game involving the residual risks induced by the default possibility and using fuzzy coalitions. |
|
José María Jorquera Valero, Pedro Miguel Sánchez Sánchez, Manuel Gil Pérez, Alberto Huertas Celdran, Gregorio Martínez Pérez, Toward pre-standardization of reputation-based trust models beyond 5G, Computer Standards and Interfaces, Vol. 81 (1), 2022. (Journal Article)
 
In the last years, the number of connections in mobile telecommunication networks has increased rampantly, and in consequence, the number and type of relationships among entities. Should such interactions are to be profitable, entities will need to rely on each other. Hence, mobile telecommunication networks demand trust and reputation models that allow developing feasible communications in 5G and beyond networks, through which a group of entities can establish chains of services between cross-operators/domains, with security and trustworthiness. One of the key obstacles to achieving generalized connectivity beyond 5G networks is the lack of automatized, efficient, and scalable models for establishing security and trust. In this vein, this article proposes a pre-standardization approach for reputation-based trust models beyond 5G. To this end, we have realized a thorough review of the literature to match trust standardization approaches. An abstract set of requirements and key performance indicators has been extracted, and some pre-standardization recommendations proposed to fulfill essential conditions of future networks and to cover the lack of common trust and reputation models beyond 5G. |
|
Johannes Brumm, Xiangyu Feng, Laurence Kotlikoff, Felix Kübler, Are Deficits free?, Journal of Public Economics, Vol. 208, 2022. (Journal Article)

Deficit finance, aka pay-go policy, is free when growth rates routinely exceed safe government borrowing rates. Or so many say. This note presents four counterexamples based on four versions of a simple OLG economy. In each version the growth rate exceeds the safe rate for one of four reasons – uninsured idiosyncratic risk, uninsured aggregate risk, policy uncertainty, and imperfect financial intermediation. Deficit finance does not directly address any of these problems. What works, respectively speaking, is progressive taxation, bilateral intergenerational risk-sharing, early policy resolution, and improved intermediation. The four examples thus show that seemingly free deficits may be more costly than they appear. Indeed, inefficient pay-go policy can even lower the government’s borrowing rate, encouraging yet more deficit finance. |
|
Jonathan Fu, Mrinal Mishra, Fintech in the time of COVID-19: Technological adoption during crises, Journal of Financial Intermediation, Vol. 50, 2022. (Journal Article)

We document the effects of the COVID-19 pandemic on digital finance and fintech adoption. Drawing on mobile application data from a globally representative sample, we find that the spread of COVID- 19 and related government lockdowns led to a sizeable increase in the rate of finance app downloads. We then analyze factors that may have driven this effect on the demand-side and better understand the “winners” from this digital acceleration on the supply-side. Our overall results suggest that traditional incumbents saw the largest growth in their digital offerings during the initial period, but that "BigTech" companies and newer fintech providers ultimately outperformed them over time. Finally, we drill-down further on the adoption of fintech apps pertaining to both the asset and liability side of the traditional bank balance sheet, to explore the implications that the accelerated trends in digitization may have for the future landscape of financial intermediation. |
|
Anil Özdemir, Helmut Max Dietl, Gianbattista Rossi, Rob Simmons, Are workers rewarded for inconsistent performance?, Industrial Relations, Vol. 61 (2), 2022. (Journal Article)
 
This paper examines whether workers are rewarded for inconsistent performance by salary premia. Some earlier research suggests that performance inconsistency leads to salary premia, while other research finds premia for consistent performance. Using detailed salary and performance data for top-level footballers in Italy’s Serie A, we find that inconsistency is penalized for some important dimensions of basic performance measures associated with key skills of players, specifically clearances, aerial duels won, and shots on target. |
|
Thorsten Hens, Marc Oliver Bettzüge, Michael Zierhut, Financial Intermediation and the Welfare Theorems in Incomplete Markets, Economic Theory, Vol. 73, 2022. (Journal Article)

In production economies with incomplete markets, shareholders disagree about the objective of the firm. We show that a weak financial intermediary, who is unable to complete markets, can offer just enough spanning to resolve this disagreement. The intermediary is limited to offering one customized contract per consumer. Knowledge of demand functions is sufficient for offering the right contracts. Once agreement among shareholders is reached, productive efficiency is restored, which in turn permits a Pareto efficient market outcome. This result shows that the first welfare theorem does not depend on complete spanning, but merely on institutions that provide the right span. However, this cannot be said about the second welfare theorem: For some wealth distributions, equilibria with transfers fail to exist due to nonconvexities caused by market incompleteness. |
|
Thorsten Hens, Rabah Amir, Igor Evstigneev, Sergei Belkov, An evolutionary finance model with short selling and endogenous asset supply, Economic Theory, Vol. 73, 2022. (Journal Article)

Evolutionary finance focuses on questions of “survival and extinction” of investment strategies (portfolio rules) in the market selection process. It analyzes stochastic dynamics of financial markets in which asset prices are determined endogenously by a short-run equilibrium between supply and demand. Equilibrium is formed in each time period in the course of interaction of portfolio rules of competing market participants. A comprehensive theory of evolutionary dynamics of this kind has been developed for models in which short selling is not allowed and asset supply is exogenous. The present paper extends the theory to a class of models with short selling and endogenous asset supply. |
|
Marc Oliver Bettzüge, Thorsten Hens, Michael Zierhut, Financial intermediation and the welfare theorems in incomplete markets, Economic Theory, Vol. 73 (2-3), 2022. (Journal Article)
 
In production economies with incomplete markets, shareholders disagree about the objective of the firm. We show that a weak financial intermediary, who is unable to complete markets, can offer just enough spanning to resolve this disagreement. The intermediary is limited to offering one customized contract per consumer. Knowledge of demand functions is sufficient for offering the right contracts. Once agreement among shareholders is reached, productive efficiency is restored, which in turn permits a Pareto efficient market outcome. This result shows that the first welfare theorem does not depend on complete spanning, but merely on institutions that provide the right span. However, this cannot be said about the second welfare theorem: For some wealth distributions, equilibria with transfers fail to exist due to nonconvexities caused by market incompleteness. |
|
Mykola Makhortykh, Aleksandra Urman, Felix Victor Münch, Amélie Heldt, Stephan Dreyer, Matthias C Kettemann, Not all who are bots are evil: A cross-platform analysis of automated agent governance, New Media & Society, Vol. 24 (4), 2022. (Journal Article)
 
The growth of online platforms is accompanied by the increasing use of automated agents. Despite being discussed primarily in the context of opinion manipulation, agents play diverse roles within platform ecosystems that raises the need for governance approaches that go beyond policing agents’ unwanted behaviour. To provide a more nuanced assessment of agent governance, we introduce an analytical framework that distinguishes between different aspects and forms of governance. We then apply it to explore how agents are governed across nine platforms. Our observations show that despite acknowledging diverse roles of agents, platforms tend to focus on governing selected forms of their misuse. We also observe differences in governance approaches used by platforms, in particular when it comes to the agent rights/obligations and transparency of policing mechanisms. These observations highlight the necessity of advancing the algorithmic governance research agenda and developing a generalizable normative framework for agent governance. |
|
Shauna L Rohner, Florence Bernays, Andreas Maercker, Myriam V Thoma, Salutary mechanisms in the relationship between stress and health: The mediating and moderating roles of Sense of Coherence-Revised, Stress and Health, Vol. 38 (2), 2022. (Journal Article)
 
While chronic and acute stress are often associated with negative health, the sense of coherence-revised (SOC-R) is proposed to facilitate coping with stress and promote health. However, research is lacking on the specific mechanisms. Therefore, the current study aimed to investigate potential mediating and moderating mechanisms of SOC-R in the relationship between stress and health. Using a cross-sectional design, standardized questionnaires assessed SOC-R, acute (perceived) stress, early-life adversity (ELA; indicator for early-life chronic stress), mental and physical health, and satisfaction with life. Mediation and moderation analyses were conducted with N = 531 Irish adults (mean age: 59.5 years; 58.4% female). Regarding acute (perceived) stress, results showed that SOC-R and its Manageability subscale significantly mediated the association between perceived stress and mental health, and satisfaction with life. SOC-R and its Manageability subscale also significantly moderated the association between perceived stress and mental health. Regarding ELA, the Manageability subscale significantly mediated the association between ELA and mental health, and satisfaction with life; and the Balance subscale significantly mediated the association between ELA and physical health. SOC-R may provide a useful focus for stress-related research, with future longitudinal studies needed to examine SOC-R as a long-term modulating pathway between stress and health. |
|
Dominik van Aaken, Katja Rost, David Seidl, The impact of social class on top managers’ attitudes towards employee downsizing, Long Range Planning, Vol. 55 (2), 2022. (Journal Article)

In this paper, we examine the impact of top managers' social class on their attitude towards employee downsizing. Mobilizing Bourdieu's concepts of social class as a unique social position defined by the combination of economic, cultural, and social capital, we develop hypotheses about the effects of different capital endowments, which we test with unique data on more than 2500 top managers in Germany. We find that both higher economic and higher social capital increase openness towards employee dismissals, while higher cultural capital reduces it. We also find that the overall effect of a top manager's social position is an aggregate of the effects of the individual types of capital: Managers with high cultural, low social and low economic capital are least open to employee dismissals, while those with low cultural, high social and high economic capital are most open – with the other combinations lying somewhere between the two extremes. |
|
Alexander Soutschek, Alexandra Bagaïni, Todd Anthony Hare, Philippe Tobler, Reconciling psychological and neuroscientific accounts of reduced motivation in aging, Social Cognitive and Affective Neuroscience, Vol. 17 (4), 2022. (Journal Article)
 
Motivation is a hallmark of healthy aging, but the motivation to engage in effortful behavior diminishes with increasing age. Most neurobiological accounts of altered motivation in older adults assume that these deficits are caused by a gradual decline in brain tissue, while some psychological theories posit a switch from gain orientation to loss avoidance in motivational goals. Here, we contribute to reconcile the psychological and neural perspectives by providing evidence that the frontopolar cortex (FPC), a brain region involved in cost–benefit weighting, increasingly underpins effort avoidance rather than engagement with age. Using anodal transcranial direct current stimulation together with effort–reward trade-offs, we find that the FPC’s function in effort-based decisions remains focused on cost–benefit calculations but appears to switch from reward-seeking to cost avoidance with increasing age. This is further evidenced by the exploratory, independent analysis of structural brain changes, showing that the relationship between the density of the frontopolar neural tissue and the willingness to exert effort differs in young vs older adults. Our results inform aging-related models of decision-making by providing preliminary evidence that, in addition to cortical thinning, changes in goal orientation need to be considered in order to understand alterations in decision-making over the life span. |
|
Yasamin Klingler, Claude Lehmann, João Pedro Monteiro, Carlo Saladin, Abraham Bernstein, Kurt Stockinger, Evaluation of Algorithms for Interaction-Sparse Recommendations: Neural Networks don’t Always Win, In: Proceedings of the 25th International Conference on Extending Database Technology (EDBT), OpenProceedings.org, OpenProceedings.org, 2022. (Conference or Workshop Paper published in Proceedings)
 
In recent years, top-K recommender systems with implicit feed- back data gained interest in many real-world business scenarios. In particular, neural networks have shown promising results on these tasks. However, while traditional recommender systems are built on datasets with frequent user interactions, insurance recommenders often have access to a very limited amount of user interactions, as people only buy a few insurance products.
In this paper, we shed new light on the problem of top-K recommendations for interaction-sparse recommender problems. In particular, we analyze six different recommender algorithms, namely a popularity-based baseline and compare it against two matrix factorization methods (SVD++, ALS), one neural network approach (JCA) and two combinations of neural network and factorization machine approaches (DeepFM, NeuFM). We evaluate these algorithms on six different interaction-sparse datasets and one dataset with a less sparse interaction pattern to elucidate the unique behavior of interaction-sparse datasets.
In our experimental evaluation based on real-world insurance data, we demonstrate that DeepFM shows the best performance followed by JCA and SVD++, which indicates that neural network approaches are the dominant technologies. However, for the remaining five datasets we observe a different pattern. Overall, the matrix factorization method SVD++ is the winner. Surprisingly, the simple popularity-based approach comes out second followed by the neural network approach JCA. In summary, our experimental evaluation for interaction-sparse datasets demonstrates that in general matrix factorization methods outperform neural network approaches. As a consequence, traditional well- established methods should be part of the portfolio of algorithms to solve real-world interaction-sparse recommender problems. |
|
Carmen Tanner, Julia Smith, Matthias Sohn, Stefan Linder, What Kind of Person Can Resist Corruption?, In: The New Nation, p. online, 20 March 2022. (Newspaper Article)

|
|
Alan Livsey, Julian Kölbel, Boom in ESG ratings leaves trail of confusion, In: Financial Times, 19 March 2022. (Media Coverage)

|
|
Patricia Pálffy, Patrick Lehnert, Uschi Backes-Gellner, Social norms and gender-typical occupational choices?, In: 24th Colloquium on Personnel Economics. 2022. (Conference Presentation)

|
|
Eric Bettinger, Madison Dell, Patrick Lehnert, Uschi Backes-Gellner, The effect of postsecondary institutions on local economies: a bird's-eye view, In: 24th Colloquium on Personnel Economics. 2022. (Conference Presentation)

|
|
Tobias Schultheiss, Uschi Backes-Gellner, Different degrees of skill obsolescence across hard and soft skills and the role of lifelong learning for labor market outcomes, In: 24th Colloquium on Personnel Economics. 2022. (Conference Presentation)

|
|
Tobias Schlegel, Uschi Backes-Gellner, Universities of Applied Sciences and Regional Firm Location: A heterogeneity Analysis Across Study Fields and Industries, In: 24th Colloquium on Personnel Economics. 2022. (Conference Presentation)

|
|
Damiano Pregaldini, Simone Balestra, Uschi Backes-Gellner, Does ethnic diversity in schools affect occupational choices?, In: 24th Colloquium on Personnel Economics. 2022. (Conference Presentation)

|
|