Volkswirtschaftslehre, insb. Behavioral Economics

Although many strategic economic decisions are subject to time constraints, the impact of time pressure on the decision-making process of solving non-cooperative games has not been well studied in the field of behavioral game theory. This includes the effects of time pressure on decision-making in non-cooperative games (Ariely and Zakay, 2001; Ordóñez et al., 2015). Lindner and Sutter (2013) conducted the first study investigating personal sophistication in terms of the cognitive hierarchy model. To experimentally determine the distribution of level-k-reasoning types, they utilized Arad & Rubinstein’s (2012) 11-20-Game. Contrary to the findings of Sutter et al. (2003) and Kocher et al. (2006), the authors discovered a shift towards equilibrium play under growing time pressure. They attribute this discrepancy to chance since the decision information is the only factor available for interpretation. Applying a process-oriented approach in combination with process tracing methods provides valuable insights into people's decision-making behavior (Kühberger et al., 2011). In normal-form games with no time pressure, Costa-Gomes et al. (2001) found evidence of the application of common decision heuristics by scrutinizing lookup patterns in information search, response time, and decision information. However, the use of heuristics may not be stable or complete under time-pressure conditions (Johnson et al., 2008). This raises the question of what more detailed behavior patterns might be identifiable and how such patterns change with increasing time pressure. Therefore, this work develops a process theoretical framework called the 'Preparation Time Model'. This framework bases decision-making on Elementary Information Processes (EIPs) following Johnson and Payne (1985) and Chase (1978). Production systems for solving normal-form games are constructed for nine common heuristics based on EIPs (following suggestions of Newell et al., 1972). A minimum set of EIPs and how it can be identified in mouse tracking data is derived. The effectiveness and efficiency of heuristics in different games and under various time pressure conditions are determined through simulation. Significant differences in adaptation velocity between strategic and non-strategic heuristics raise the question of the extent to which it is rational to employ certain strategic heuristics under severe time pressure conditions. This work also reports on an online experiment that was conducted using Mouselabweb (Willemsen and Johnson, 2011) to investigate the influence of time constraints and task complexity on individual decision-making and its patterns in 2-person normal form games. The empirical dataset was analyzed for fifteen behavior patterns from the process categories Information Search, Information Implementation, and Choice, which frequently show sensitivity to time pressure. Data clustering indicates the existence of different types of decision-makers who pursue individual strategies to deal with time pressure: the “Strategist”, the “Adaptist”, and the “Guesser”. The findings confirm the qualitative response schema of individuals acting under time pressure in individual decision situations, as described by Miller (1960), Ben Zur and Breznitz (1981), and Zakay (1993), and specify the schema for the case of normal-form game tasks. However, questions regarding the extent to which heuristics are applied or whether findings are robust for predicting behavior remain unanswered. The empirical dataset holds potential for further scrutiny.

According to the theoretical freedom-of-choice literature and a growing body of experiments, the economic value of a decision right is reflected not only in its instrumental value, but also in an additional intrinsic value. Building upon findings from previous experiments, I use a novel two-stage laboratory experiment to examine (i) whether individuals value decision rights intrinsically, (ii) how intrinsic valuation depends on structural determinants of the related decision, and (iii) why individuals value decision rights that have no instrumental benefits. I find decision rights to have intrinsic value which is conditioned by stake size, risk, and domain. Intrinsic-value assignment is positively correlated with a preference for self-determination and –in the domain of losses– with a preference for non-interference of others. Aversion to paternalism is no significant motive behind the intrinsic valuation of decision rights.

Many decisions in organizations, politics, and economics are made collectively by groups. Often, other people who are not part of the decision-making process are affected by the resulting outcomes. Therefore, it is important to understand how individual group members are held accountable for the collective decision. In a recent paper, Bartling et al. (2015) analyzed the attribution of responsibility for collective decisions in a sequential voting game, in which three decision makers sequentially decide on an equal or unequal allocation implemented for themselves and three other recipients. They found that the pivotal decision maker was punished significantly more than non-pivotal decision makers. However, it remains unclear what other factors influence the attribution of responsibility for collective decisions. Therefore, this study extends the work of Bartling et al. (2015) in two ways: first, the decision right is assigned through one of two different (legitimate) mechanisms, and second, one allocation is already preselected as the default. The assignment of individual responsibility is measured by eliciting the punishment choices of the recipients. Interestingly, the legitimacy of the group-building mechanism has no significant effect on the assigned responsibility. However, choosing the default is associated with less punishment, as long as other punishment motives are not controlled for. Additionally, the main result of Bartling et al. (2015), that the pivotal decision maker is punished significantly more, could not be replicated. Instead, the unkindness of a decision determines the punishment behavior of recipients.

In this paper, we provide a two-country, two-class model of asymmetric capital tax competition. We show formally that poor people living in small countries can benefit from capital tax competition and therefore they are in favor of it. In order to benefit from capital inflow from larger countries, poor people in smaller countries accept less within-country income redistribution. As a consequence, between-country income inequality is increased by tax competition. © The editors of The Scandinavian Journal of Economics 2019.

One feature of legislative bargaining in naturally occurring settings is that the distribution of seats or voting weights often does not accurately reflect bargaining power. Game-theoretic predictions about payoffs and coalition formation are insensitive to nominal differences in vote distributions and instead only depend on pivotality. We conduct an experimental test of the classical Baron-Ferejohn model with five-player groups. Holding real power constant, we compare treatments with differences in nominal power. We find that initial effects of nominal differences become small or disappear with experience. Our results also point to the complexity of the environment as having a negative impact on the speed at which this transition takes place. Finally, and of particular importance as a methodological observation, giving subjects a pause accelerates learning. © 2019 Elsevier Inc.

Societal acceptance for the political goals of Germany’s Energiewende is heavily impacted by its distributional consequences as well as private households‘ individual conceptions of justice. The empirical investigation of this relationship is the main contribution of this article, which summarizes the results of the research project AKZEPTANZ financed by the German Ministry of Education and Research (BMBF). From our empirical evidence we can draw three main conclusions regarding private households‘ preferences for distributing the cost of the Energiewende. First, there is a strong preference for the ability-to-pay principle in order to finance green electricity. Second, cost uncertainty makes the ability-to-pay principle less attractive. Third, subsidizing investments into energy efficiency may lead to counterproductive reactions. © 2017, List-Gesellschaft e.V.

In this paper, we model social preferences as a function of the skewness of the distribution of initial endowments. Skewness is a measure of the asymmetry of the distribution of endowments around the mean. We argue that skewness reflects the social distance between ‘elite’ players with high initial endowments and other players with lower endowments, better than variance and concentration measures like the Gini-coefficient. We hypothesize that elite players become more selfish with increasing skewness and therefore contribute less to a public good in the framework of a one-shot non-linear public good game. The results of an experimental test, in which we systematically vary the distribution of endowments between treatments, confirm that the model is able to correctly explain the observed pattern of contribution behavior. We find that cooperation and efficiency are lowest with right-skewed distribution of endowments. Our paper therefore improves the understanding of the behavioral link between inequality and efficiency.

We introduce a skewness-based approach to measure tax progression and demand for redistribution. Adapting a novel, quantilebased statistical measure of skewness to right-skewed income distributions, we uncover its political economy foundation, by simultaneously relating the same measure to the classical model of income redistribution due to Meltzer and Richard (1981), to the Prospect Of Upward Mobility (POUM) mechanism due to B`enabou and Ok (2001), and to the progressivity of a tax schedule. In an empirical analysis of UK income distributions in 1979 – 2013, we find that skewness has increased over time, with the rich moving further away from the median. While the magnitude of the increase has remained small enough so that observed redistribution (or lack thereof ) could be consistent with POUM hypothesis, more recent periods show an increase in tax progression.