Preprints [480]

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2017
Defendant Should Have the Last Word – Experimentally Manipulating Order and Provisional Assessment of the Facts in Criminal Procedure
24
2017
Abstract
From a normative perspective the order in which evidence is presented should not bias legal judgment. Yet psychological research on how individuals process conflicting evidence sug-gests that order could matter. The evidence shows that decision-makers dissolve ambiguity by forging coherence. This process could lead to a primacy effect: initial tentative interpretations bias the view on later conflicting evidence. Or the process could result in a recency effect: the evidence presented last casts decisive light on the case. In two studies (N1 = 221, N2 = 332) we test these competing hypotheses in a mock legal case. Legal orders sometimes even expect judges to provisionally assess the evidence. At least they have a hard time preventing this from happening. To test whether this creates or exacerbates bias, in the second dimensions, we explicitly demand experimental participants to express their leaning, after having seen half of the evidence. We consistently observe recency effects and no interactions with leanings. If the legal order wants to preempt false convictions, defendant should have the last word.
Experimental Social Planners: Good Natured, but Overly Optimistic
23
2017
Abstract
Public goods are dealt with in two literatures that neglect each other. Mechanism design advises a social planner that expects individuals to misrepresent their valuations. Experiments study the provision of the good when preferences might be non-standard. We introduce the problem of the mechanism design literature into a public good experiment. Valuations for the good are heterogeneous. To each group we add a participant with power to impose a contribution scheme. We study four settings: the authority has no personal interest and (1) valuations are common knowledge or (2) active participants may misrepresent their types; the authority has a personal interest (3) and must decide before learning her own valuation or (4) knows her own valuation. Disinterested social planners predominantly choose a payment rule that gives every group member the same final payoff, even if misrepresentation is possible. Authorities are overly optimistic about truth telling. Interested social planners abuse their power, except if the opportunity cost of a more balanced rule is small.
Measuring Indirect Effects of Unfair Employer Behavior on Worker Productivity – A Field Experiment
22
2017
Abstract
We present a field experiment in which we set up a call-center to study how the productivity of workers is affected if managers treat their co-workers in an unfair way. This question cannot be studied in long-lived organizations since workers may change their career expectations (and hence effort) when managers behave unfairly towards co-workers. In order to rule out such confounds and to measure productivity changes of unaffected workers in a clean way, we create an environment where employees work for two shifts. In one treatment, we lay off parts of the workforce before the second shift. Compared to two different control treatments, we find that, in the layoff treatment, the productivity of the remaining, unaffected workers drops by 12 percent. We show that this result is not driven by peer effects or altered beliefs about the job or the managers’ competence, but rather related to the workers’ perception of unfair behavior of employers towards co-workers. The latter interpretation is confirmed in a survey among professional HR managers. We also show that the effect of unfair behavior on the productivity of unaffected workers is close to the upper bound of the direct effects of wage cuts on the productivity of affected workers. This suggests that the price of an employer’s unfair behavior goes well beyond the potential tit-for-tat of directly affected workers.
Strategic Inattention in Product Search
21
2017
Abstract
Online platforms provide search tools that help consumers to get better-fitting product offers. But this technology makes consumer search behavior also easily traceable and allows for real-time price discrimination. Consumers face a trade-off: Search intensely and receive a better fit at a potentially higher price or restrict search behavior – be strategically inattentive – and receive a worse fit, but maybe a better deal. We study the resulting strategic buyer-seller interaction theoretically as well as experimentally. Our experimental results show that it is the sellers and not the buyers who profit from these search tools.
Does Efficiency Trump Legality? The Case of the German Constitutional Court
20
2017
Abstract
The US Supreme Court has the power of certiorari. It may pick its fights. As a beneficial side effect, the court may allocate its resources, in particular the time and energy the justices spend on a case, to worthy causes. In economic parlance, this discretion makes the court more efficient. Efficiency comes at a political cost, though. This discretion also gives the court political power. It may direct its verdict to causes that are politically most relevant, or it may put an issue on the political agenda. Officially German constitutional law does not have certiorari. The Constitutional Court must decide each and every case that is brought. Yet over time the court has crafted a whole arsenal of more subtle measures for managing the case load. This paper shows that it uses these tools to engage in its version of allocating resources to cases. It investigates whether the ensuing efficiency gain comes at the cost of biasing the court’s jurisprudence. The paper exploits a new comprehensive data set. It consists of all (mostly only electronically) published cases the court has heard in 2011. While the data is rich, in many technical ways it is demanding. The paper uses a factor analysis to create a latent variable: to which degree has the court taken an individual case seriously? It then investigates whether observed indicators for bias explain this latent variable. Since the paper essentially investigates a single (independent) case, in statistical terms the findings are to be interpreted with caution. The paper can only aim at finding smoking guns.
Finanzstabilität, Transparenz und Verantwortlichkeit: Stellungnahme für das Bundesverfassungsgericht
19
2017
Abstract
Der Text beruht auf einer am 9. Mai 2017 vor dem Bundesverfassungsgericht abgegebenen Stellungnahme in der mündlichen Verhandlung zu einem Verfahren über den Umfang der Verpflichtung der Bundesregierung zur Information des Parlaments (Az. 2BvE 2/11). Das Gericht hatte um Auskünfte zur möglichen Gefährdung der Funktionsfähigkeit der Finanzmarktaufsicht und zur möglichen Gefährdung des Erfolgs der staatlichen Stützungsmaßnahmen durch eine öffentliche Beantwortung von Fragen der Bundestagsfraktion Bündnis 90/Die Grünen durch die Bundesregierung im November und Dezember 2010 gebeten. Die Stellungnahme zeigt, dass die Argumente, mit denen die Bundesregierung eine öffentliche Beantwortung ablehnte, in großen Teilen fehlerhaft waren. Die Ablehnung half, eine öffentliche Diskussion über die Ursachen und die Verantwortung für die besondere deutsche Betroffenheit durch die Finanzkrise zu vermeiden. In Anbetracht der im internationalen Vergleich sehr hohen Kosten der Krise für den deutschen Steuerzahler wäre eine solche Diskussion angebracht gewesen, auch eine Diskussion darüber, wie zweckdienlich die seitherigen Reformmaßnahmen wirklich sein würden. Die Stellungnahme vertritt die Auffassung, dass Einschränkungen des Anspruchs eines Finanzinstituts auf Vertraulichkeit vertretbar und ohne Schäden für die Funktionsfähigkeit der Aufsicht durchzusetzen sind, wenn diese Einschränkungen im Zusammenhang mit einer Staatshilfe stehen, die das Institut vor der Zahlungsunfähigkeit bewahrt hat. Bei Instituten, die eine Unterstützung durch den Steuerzahler benötigt und erhalten haben, war und ist das Risiko einer erneuten Destabilisierung durch Informationen über die Vergangenheit gering. Die Stellungnahme weist auch die pauschale Vorstellung zurück, dass Transparenz an sich schon die Stabilität einzelner Banken oder gar des gesamten Finanzsystems gefährde, da jegliche Information panikartige Marktreaktionen hervorrufen könne. Modelle panikartiger Reaktionen auf „Sonnenflecken“, d.h. Informationen, die irrelevant sind oder keinen Neuigkeitswert haben, sind in der Wirtschaftstheorie populär, aber in der Realität werden Paniken durch neue Informationen ausgelöst, die die Erwartungen der Anleger über wirtschaftlichen Aussichten substantiell beeinflussen.
How uncertainty and ambiguity in tournaments affect gender differences in competitive behavior
18
2017
Abstract
Tournament incentives prevail in labor markets, in particular with respect to promotions. Yet, it is often unclear to competitors how many winners there will be or how many applicants compete in the tournament. While it is hard to measure how this uncertainty affects work performance and willingness to compete in the field, it can be studied in a controlled lab experiment. We present a novel experiment where subjects can compete against each other, but where the number of winners is either uncertain (i.e., unknown numbers of winners, but known probabilities) or ambiguous (unknown probabilities for different numbers of winners). We compare these two conditions with a control treatment with a known number of winners. We find that ambiguity induces a significant increase in performance of men, while we observe no change for women. Both men and women increase their willingness to enter competition with uncertainty and ambiguity, but men react slightly more than women. Overall, both effects contribute to men winning the tournament significantly more often than women under uncertainty and ambiguity. Hence, previous experiments on gender differences in competition may have measured a lower bound of differences between men and women.
Behaviorally Efficient Remedies – An Experiment
17
2017
Abstract
Under common law, the standard remedy for breach of contract is expectation damages. Under continental law, the standard is specific performance. The common law solution is ex post efficient. But is it also ex ante efficient? We use experimental methods to test whether knowing that non-fulfilment will only lead to damages deters mutually beneficial trade. The design excludes aversion against others willfully breaking their promises. We find that there is indeed less trade if specific performance is not guaranteed, provided the preference for the traded commodity is sufficiently pronounced.
Committing the English and the Continental Way – An Experiment
16
2017
Abstract
On the doctrinal surface, there is a deep divide between common and continental law when it comes to the origin of contractual obligations. Under continental law, in principle a unilateral promise suffices. Common law by contrast requires consideration. When it comes to deciding cases, the divide is much less pronounced. But for the most part the law does not govern people's lives through adjudication. It matches or molds their moral intuitions. We test these intuitions in the lab. If consideration is required, participants believe that all participants make more ambitious promises. But they themselves make a more cautious promise. These two effects cancel out, so that promises are not more likely to be kept with consideration.
Abuse of Power – An experimental investigation of the effects of power and transparency on centralized punishment
15
2017
Abstract
We investigate power abuse of a single punisher in a public-goods-game subject to variations in punishment power and contribution transparency. We find a high amount of abuse across all conditions. More power led to more abuse over time, while transparency could only curb abuse in the high power conditions. These findings highlight the dangers of power centralization, but suggest a more complex relation of power and transparency.