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Essays In Applied Microeconomics And Behavioral Finance
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Book Synopsis Essays in Applied Microeconomics and Behavioral Finance by : Marco Giovanni Nieddu
Download or read book Essays in Applied Microeconomics and Behavioral Finance written by Marco Giovanni Nieddu and published by . This book was released on 2018 with total page 141 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis consists of three chapters. In the first chapter, I investigate how promo-tion incentives affect the performance of high-skilled public employees. I study a centralized evaluation process awarding the eligibility for associate and full pro-fessorship in Italian academia, and show that the perspective of a promotion in-duces scholars to increase their research productivity. In the second chapter, I present the results from a laboratory experiment designed to assess whether and how financial literacy influences the way individuals perceive and evaluate finan-cial assets. By comparing participants' investment decisions under different treat-ments, I show that the lack of financial literacy lowers the subjective value that investors assign to risky financial assets. The third and last chapter is devoted to an empirical analysis of the link between university quality and employment opportunities. I find that postgraduate students who receive incentives to attend higher-ranked universities are more likely to be employed one year and a half after the end of their studies.
Book Synopsis Incentives in Financial and Behavioral Economics by : Florian Hett
Download or read book Incentives in Financial and Behavioral Economics written by Florian Hett and published by . This book was released on 2015 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis deals with the empirical identification of incentive effects in various settings.The central chapter looks at the financial crisis of 2007-2009 and the incentive effects caused by policy interventions in financial markets. A hypothesis controversially discussed by academics as well as policy makers is that public bailouts for banks destroy market discipline, that is the incentives for decentralized monitoring by market participants. In turn, this might induce stronger risk-taking by banks and finally make future crises more likely and severe. The thesis describes a new methodology to identify this effect and shows that market discipline strongly deteriorated during the crisis period. In additional chapters, this thesis empirically identifies incentive effects in dynamic contest situations.
Book Synopsis Essays in Applied Behavioral Microeconomics by : Giovanni Paci
Download or read book Essays in Applied Behavioral Microeconomics written by Giovanni Paci and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The estimates can be effectively reconciled by models of reference-dependent preferences that take drivers' expectation as reference points: drivers are more likely to cheat on those rides within a shift in which they are below expectations. The results highlight the role played by a classic decision-making bias in shaping unethical behavior in a market. These findings suggests that cognitive and emotional aspects of the valuation of benefits are relevant to our economic understanding of ethical problems. The third chapter presents regression-discontinuity evidence on an investment-incentive program. The methodology, which compares firms who received the award with those that marginally lost it, allows for a cleaner identification of the effect of the policy. In this last essay, the conceptual tools from Applied Microeconomics used in the first chapter are put to work in the context of firms' behavior. The tool allows one to show in a straightforward manner the main outcomes of the policy.
Book Synopsis Essays in Applied Microeconomics by : Aviva Aron-Dine
Download or read book Essays in Applied Microeconomics written by Aviva Aron-Dine and published by . This book was released on 2012 with total page 154 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three chapters on topics in applied microeconomics. In the first chapter. I investigate whether voters are more likely to support additional spending on local public services when they perceive current service quality to be high. My empirical strategy exploits discontinuities in the Texas school ratings formula that create quasi-random variation in perceptions about school quality. I find that receiving an "exemplary" versus a "recognized" rating increases support for a school district's bond measures by about 10 percentage points. Voters respond to the level of a district's rating. not just to whether the district has improved or slipped. I develop and implement a test for whether these patterns of voter behavior lead to efficient outcomes; however, the results are inconclusive. The second chapter. written jointly with Liran Einav, Amy Finkelstein, and Mark Cullen. investigates whether individuals exhibit forward looking behavior in their response to the nonlinear pricing common in health insurance contracts. Our empirical strategy exploits the fact that employees who join an employer-provided health insurance plan later in the calendar year face the same initial price of medical care but a higher expected end-of-year price than employees who join the same plan earlier in the year. Our results reject the null of completely myopic behavior; medical utilization appears to respond to the future price, with a statistically significant elasticity of medical utilization with respect to the future price of -0.4 to -0.6. To try to quantify the extent of forward looking behavior., we develop a stylized dynamic model of individual behavior and calibrate it using our estimated behavioral response and additional data from the RAND Health Insurance Experiment. Our calibration suggests that the elasticity estimate may be substantially smaller than the one implied by fully forward-looking behavior, yet it is sufficiently high to have an economically significant effect on the response of annual medical utilization to a non-linear health insurance contract. Overall. our results point to the empirical importance of accounting for dynamic incentives in analyses of the impact of health insurance on medical utilization. In the third chapter. I exploit a discontinuity in federal financial aid rules at age 24 to estimate the effect of financial aid on college enrollment. school choice. and persistence and degree completion rates. Undergraduate students who are not married and do not have children are classified as "dependent" or "independent" for purposes of federal financial aid based on whether they have turned 24 as of January 1 of the "award year." Independent students qualify for additional grant aid and are eligible to take out much larger federal loans. Using data from the National Postsecondary Student Aid Study and the Beginning Postsecondary Students Longitudinal Study. I show that average grant aid per student increases by about $1.100. or 55%. at age 24. while 12% of students take advantage of the higher federal loan limits. Estimates of the effects of additional aid on enrollment, persistence. and degree completion are inconclusive; while not statistically significant. they do not allow me to rule out sizable effects. I do find evidence of an increase in enrollment at for-profit colleges. concentrated among students whose parents are not college graduates.
Book Synopsis Three Essays on Applied Microeconomics by : Jie Yang
Download or read book Three Essays on Applied Microeconomics written by Jie Yang and published by . This book was released on 2016 with total page 124 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three chapters, each of which can be considered an independent essay. The three essays contribute to labor economics, sports economics, and behavioral economics. The first chapter focuses on pay and performance in a team environment. Working in teams increases productivity but also generates incentives to shirk. Recent research suggests that peer enforcement, coupled with financial incentives in a setting of repeated interactions, can play a role in deterring shirking in teams. This paper, entitled "Peer Enforcement in Teams: Evidence from High-Skill Professional Workers with Repeated Interactions," analyzes 10 years of performance and compensation data for NFL offensive linemen, a high-skill, high-salary, repeatedly interacting team, using the Hausman-Taylor estimator to control for unobservable individual-specific heterogeneity. We find evidence that teammates' effort signals reduce the salaries of individual offensive linemen, providing a low powered sanctioning mechanism for individual workers in this setting. A separate, independently monitored individual effort signal also reduces salaries. The second chapter of my dissertation is "Consumption Commitments and Simultaneous Insuring and Gambling: evidence from Canada." This paper extends recent work by Chetty and Szeidl (2007) on a classic economic research question: why do some individuals simultaneously buy insurance and gamble? This behavior is "contradictory" to von Neumann-Morgenstern expected utility theory because insurance purchase indicates risk aversion while gambling indicates risk loving. Chetty and Szeidl (2007) propose a novel explanation based on consumption commitments which magnify risk aversion, inducing Friedman-Savage local non-concavity in the utility function. Theoretically, the paper shows that commitments increase risk loving over gambles with large uncertain payoffs but for gambles with moderate-to-large uncertain payoffs, moderate commitments amplify risk loving, while large commitments mitigate risk loving. Empirically, patterns in household decisions to participate in government-run lotteries, small prize gambles (including casino gambling, slot machines, and video lottery terminals), and to purchase life insurance support these predictions; households with large consumption commitments are more likely to participate in activities with large uncertain payoffs. The last chapter, "The Relationship Between Consumer Spending on Exercise, Sports Betting and Attending Sporting Events" also utilizes data from the SHS, but a large sample - more than 145,000 households. We investigate the relationship between consumer spending on three alternative leisure time activities: sports betting, exercise and attending live sporting events. Recent proposed changes in legal sports betting, and claims about attending games and participation in physical activity motivate analysis of these categories of consumer spending. Using several versions of an Almost Ideal Demand System (AIDS) and the related Quadratic AIDS (QAIDS) models, we estimate the parameters that determine the relationship between consumer spending on these activities. Results show that betting and attending games are complements. Betting and exercise, and attending games and exercise are substitutes.
Book Synopsis Essays in Applied Microeconomics by : Mitchell H. Hoffman
Download or read book Essays in Applied Microeconomics written by Mitchell H. Hoffman and published by . This book was released on 2012 with total page 127 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three essays. All are in personnel economics, using data from the trucking industry. Training by firms is a central means by which workers accumulate human capital, yet firms may be reluctant to train if workers can quit and use their gained skills elsewhere. "Training contracts" that impose a penalty for premature quitting can help alleviate this inefficiency. The first essay from this dissertation studies training contracts in the U.S. trucking industry where they are widely used, focusing on data from one leading firm. Exploiting two plausibly exogenous contract changes that introduced penalties for quitting, I confirm that training contracts significantly reduce quitting. To analyze the optimal design of training contracts and their welfare consequences, I develop and estimate a structural learning model with heterogeneous beliefs that accounts for many key features of the data. The estimation combines weekly productivity data with weekly subjective productivity forecasts for each worker and reveals a pattern of persistent overconfidence whereby many workers believe they will achieve higher productivity than they actually attain. If workers are overconfident about their productivity at the firm relative to their outside option, they will be less likely to quit and more likely to sign training contracts. Counterfactual analysis shows that workers' estimated overconfidence increases firm profits by over $7,000 per truck, but reduces worker welfare by 1.5%. Banning training contracts decreases profits by $4,600 per truck and decreases retention by 25%, but increases worker welfare by 4%. Despite the positive effect of training contracts on profits, training may not be profitable unless some workers are overconfident. A robust finding in experimental psychology and economics is that people tend to be overconfident about their ability. However, much less is known about whether overconfidence can be reduced or eliminated, particularly in field settings. The second essay of this dissertation provides new evidence using data from the workplace. A field experiment with a large trucking firm shows that workers tend to systematically overpredict their productivity and that their overconfidence is unaffected by whether workers receive financial incentives of different sizes for accurate guessing. Randomly informing workers about other workers' overconfidence reduces overconfidence in the short-run, but the effect fades within two weeks. Neither the incentives or information treatments have any effect on worker satisfaction or search behavior. Using long-term survey data from a second firm, I show that experience reduces overconfidence, but only quite slowly. Although workers at both firms exhibit aspects of Bayesian updating, overconfidence appears to be sticky and difficult to change. The third essay analyzes worker referrals. Many firms use referrals in their recruitment and hiring procedures. Are these practices profitable, and if so, why? A model is developed where referrals may improve selection and reduce moral hazard. The model is tested using extremely detailed personnel and survey data from a leading firm in the trucking industry. Referred workers are similar to non-referred workers across a large number of background characteristics and lab experimentally-measured dimensions of preferences. Referred workers are between 10-25% less likely to quit; the effects are strong across all groups of drivers, including new workers for whom the firm invests in expensive firm-sponsored general training. However, referred workers attain similar initial productivity and productivity growth as non-referred workers, and are no more likely to engage in various forms of moral hazard. The accumulation of friends after the starting work does not positively affect retention, productivity, or moral hazard. On net, the evidence is consistent with the idea that referrals benefit firms by selecting workers with a better fit for the job, as opposed to selecting workers with higher overall quality, by affecting worker behavior, or by changing job amenities.
Author :George Katona Publisher :Ann Arbor, Mich. : Survey Research Center, Institute for Social Research, University of Michigan ISBN 13 : Total Pages :120 pages Book Rating :4.:/5 (43 download)
Book Synopsis Essays on Behavioral Economics by : George Katona
Download or read book Essays on Behavioral Economics written by George Katona and published by Ann Arbor, Mich. : Survey Research Center, Institute for Social Research, University of Michigan. This book was released on 1980 with total page 120 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays in Applied Microeconomics by : László Sándor
Download or read book Essays in Applied Microeconomics written by László Sándor and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation collects three pieces of work. The first chapter documents empirically how Danish households substituted between insurance and liquidity, namely how the up-take of unemployment insurance fell when credit suddenly became more cheaply available for some. The second chapter presents results from a natural field experiment comparing financial and non-financial incentives to promote pro-social behavior. Finally, the third chapter presents the theoretical motivation for and results from a laboratory experiment conducted in Iceland on measuring time preferences conditional on incomes not changing, or correcting for the change when they do.
Book Synopsis Behavioural Economics and Finance by : Michelle Baddeley
Download or read book Behavioural Economics and Finance written by Michelle Baddeley and published by Routledge. This book was released on 2018-10-17 with total page 344 pages. Available in PDF, EPUB and Kindle. Book excerpt: Behavioural economics and behavioural finance are rapidly expanding fields that are continually growing in prominence. While orthodox economic models are built upon restrictive and simplifying assumptions about rational choice and efficient markets, behavioural economics offers a robust alternative using insights and evidence that rest more easily with our understanding of how real people think, choose and decide. This insightful textbook introduces the key concepts from this rich, interdisciplinary approach to real-world decision-making. This new edition of Behavioural Economics and Finance is a thorough extension of the first edition, including updates to the key chapters on prospect theory; heuristics and bias; time and planning; sociality and identity; bad habits; personality, moods and emotions; behavioural macroeconomics; and well-being and happiness. It also includes a number of new chapters dedicated to the themes of incentives and motivations, behavioural public policy and emotional trading. Using pedagogical features such as chapter summaries and revision questions to enhance reader engagement, this text successfully blends economic theories with cutting-edge multidisciplinary insights. This second edition will be indispensable to anyone interested in how behavioural economics and finance can inform our understanding of consumers’ and businesses’ decisions and choices. It will appeal especially to undergraduate and graduate students but also to academic researchers, public policy-makers and anyone interested in deepening their understanding of how economics, psychology and sociology interact in driving our everyday decision-making.
Book Synopsis Essays in Behavioral Finance and Social Economics by : Samir M. Hammami
Download or read book Essays in Behavioral Finance and Social Economics written by Samir M. Hammami and published by . This book was released on 2006 with total page 308 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays in Behavioral Finance by : Anders Anderson
Download or read book Essays in Behavioral Finance written by Anders Anderson and published by . This book was released on 2004 with total page 132 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays in Behavioral Finance by : Karen Vanessa Selody
Download or read book Essays in Behavioral Finance written by Karen Vanessa Selody and published by . This book was released on 2008 with total page 390 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays in Behavioral Economics and Microeconomic Theory by : Lukas Bolte
Download or read book Essays in Behavioral Economics and Microeconomic Theory written by Lukas Bolte and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Following my research interests, this dissertation covers two fields of economics--behavioral economics (Chapters 1 and 2) and microeconomic theory (Chapters 3 and 4). Behavioral economics. In the first strand of my research, I develop and experimentally test theories to better understand individual-level behavioral phenomena and biases. In the last decades, behavioral economists have documented a variety of behavioral phenomena and biases across a range of economic environments, including information avoidance in health and financial domains, default effects in dynamic choice, belief distortions and probability weighting in choices over lotteries, and time inconsistency in preferences over consumption sequences. Behavioral economists typically explain each of these phenomena with a distinct mechanism. In the first chapter titled ``Emotional Inattention'' (joint with Collin B. Raymond), I develop a model that can simultaneously generate all of these phenomena and more, helping provide a unified account for many observed biases. It is a model of attention allocation, where in addition to its usual instrumental role, attention generates and regulates emotions. This role has been highlighted by psychologists but is rarely formally studied by economists. This second role of attention leads decision-makers to ignore low-payoff situations, leading to the so-called ostrich effect (where individuals ignore poorly performing financial assets), avoidance of potentially negative health tests, and pessimistic defaults in order to account for future inattention. When attention is allocated across possible realizations of an unknown state, the decision-maker has as-if distorted beliefs with additional weight on states that receive high attention. Similarly, when attention is allocated across time, the decision-maker develops preferences over the timing of consumption--they value consumption more in time periods with high attention, leading to as-if discounting. Because my model suggests these biases all emerge from a desire to manage emotions, it comes with many new predictions and implications for policymaking. Many documented deviations from the Bayesian benchmark--e.g., individuals' tendency to neglect correlation when processing information--are traditionally attributed to bounded rationality and hence thought of as cognitive mistakes. In the second chapter, titled ``Motivated Mislearning: The Case of Correlation Neglect'' (with Tony Q. Fan), I show that such cognitive ``mistakes'' can arise because of preferences and may thus not be actual mistakes. We designed an experiment to study the role of motivated reasoning in correlation neglect. In the main treatment, participants receive potentially redundant signals about an ego-relevant state--their IQ test performance. We then ask them how likely the signals are from the same source (and thus contain redundant information). Participants generally underappreciate the extent to which identical signals are more likely to come from the same source, but the bias is stronger for identical ego-favorable signals than for identical ego-unfavorable signals. This suggests that individuals may neglect the correlation between desirable signals to sustain motivated beliefs. Thus, cognitive ``mistakes'' that have traditionally been attributed to bounded rationality may, in fact, be utility maximizing. Microeconomic theory. The second strand of my work uses the tools of applied microeconomic theory to understand equilibrium outcomes when economic agents interact. In the third chapter, titled ``Robust contracting under double moral hazard'' (with Gabriel Carroll; forthcoming at Theoretical Economics), I seek to understand the prevalence of profit-sharing rules in agency relationships between private agents. In franchising partnerships, for instance, the franchisee typically pays an upfront fee and a fixed share of the revenue as royalties to the franchisor. We study a general contracting problem between a principal and an agent where both parties need to exert effort for production to take place. We identify a specific virtue of linear contracts: They are robust to uncertainty about the details of the environment and provide the highest payoff guarantees. We thus offer a tractable general-purpose model of double moral hazard and specifically express the robustness intuition underlying linear contracts. In the fourth chapter, titled ``Interactions across multiple games: cooperation, corruption, and organizational design, '' (with Jonathan B. Bendor, Nicole Immorlica, and Matthew O. Jackson), I built a model to understand how desired cooperation and undesired cooperation (e.g., corruption) are interlinked and how organizations can encourage the former while discouraging the latter. We show that because cooperation in one situation may depend on expectations of cooperation in others, it may be impossible to get desirable types of cooperation without also getting undesirable ones. More generally, we characterize this interdependency and study how the level of cooperation depends on the assignment of workers to teams and teams to tasks. Lastly, we study performance bonuses, occupational safety, and whistle-blowing rewards as possibly effective tools to promote desired and limit undesired cooperation.
Book Synopsis Essays on Behavioral Market Design and Applied Microeconomic Theory by : Robizon Khubulashvili
Download or read book Essays on Behavioral Market Design and Applied Microeconomic Theory written by Robizon Khubulashvili and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In Chapter 1 of my dissertation -- co-authored with Ala Avoyan and Giorgi Mekerishvili, we investigate market design for online gaming platforms. Since a large part of such platforms' income is generated by advertisement, it is essential to know what influences how long users stay on the platform. We provide evidence of history-dependent stopping behavior in non-monetary environments. We find that there are two types of people: those who are more likely to stop playing after a loss; and others, who are more likely to keep playing until a win. We find that an individual's type is time-invariant over the years. We propose a behavioral dynamic choice model where utility from playing another game is directly affected by the outcome of the previous game. We structurally estimate this time non-separable preference model and conduct counterfactual analyses to evaluate alternative market designs. We find that in the context of online chess games a matching algorithm that incorporates stopping behavior can increase the length of play by 5.44%. Chapter 2 of my dissertation, studies how investors react to the arrival of new information when they are considering whether to pull out their investment or not. Proprietary data from online bookmaker shows that bettors' (investors') decision to cash-out their bet (investment) follows systematic patterns. To better understand how new information affects investors' decisions, I create a new game, the "cash-out" game, and study it in the lab. I find that we can divide the population of investors into two main groups. The first group is more likely to withdraw an investment if they get good news -- these investors under-interpret good news. The second group is more likely to withdraw an investment after getting negative news -- these investors over-interpret bad news. Those biases in belief updating can be used by a market designer to extract larger fraction of consumer surplus by offering dynamic contract which takes into account consumer's type. In Chapter 3 of my dissertation, I investigate potential collaboration dynamics among two R&D teams called research joint venture (RJV). I showed that with observable types collaboration is sustainable for some parameter values. Next, I consider two cases with asymmetric information, in which one player's ability is observable (player A), while another player's ability is private information (player B). First, I show that if ability of player A is moderately low, RJV and first best outcome is sustainable for limited period of time but there is break up with positive probability in every equilibrium. Second, when ability of player A is very high, RJV is sustainable for some period of time but no matter what player B's actual type is there will be break up and re-establishment of the RJV with positive probability. I also designed an experiment to test theoretical predictions in the laboratory. In line with the theory prediction, I found that reputation building might lead to the break up of the RJV.
Book Synopsis Essays in Applied Behavioral Economics by : Nathan Charles Berg
Download or read book Essays in Applied Behavioral Economics written by Nathan Charles Berg and published by . This book was released on 2001 with total page 204 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Three Essays in Applied Microeconomics by : Sungmin Han
Download or read book Three Essays in Applied Microeconomics written by Sungmin Han and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: My dissertation is composed of three sections. The first section examines the effect of monetary incentives on student performance in public education in Texas. I address how to deal with non-random samples caused by self-selection bias by using propensity score matching method. For the second part, using household level panel data, it addresses the substantial heterogeneity across demographic groups. In addition, for the last section, I also investigate firm's optimal innovation strategy. It addresses the relationship among firm growth, firm size and firm behavior in the U.S. manufacturing industry. The first section investigates the causal relationship between a teacher incentive program (District Awards for Teacher Excellence (D.A.T.E.) Program) and student academic achievement in Texas by using school-grade level panel data. I find that D.A.T.E. schools obtain significantly higher student achievement gains in reading and math than non-D.A.T.E. schools after the implementation of the program. In addition, D.A.T.E. schools implementing selected school plan obtain greater student achievement gains than those implementing district wide plan. However, the causal effects are found mainly among middle school. Importantly, these findings imply that the teacher incentive program could be an effective policy tool in Texas for developing student performance, but should be cautiously implemented due to the difference in effects according to the U.S. school level. The second section shows that while financial benefit and moral hazard appears to be the main cause of bankruptcy for less educated individuals, well-educated individuals file due to negative income shocks. This is consistent with some evidence suggesting that educated individuals face greater stigma and/or worse information regarding bankruptcy than less-educated individuals. Importantly, these results imply that optimal bankruptcy policy should likely vary across different demographic groups. In the third section, I find that firm size is negatively related to firm growth and positively correlated with firm survivability in the manufacturing industry. R&D investment has a significantly positive effect on firm growth and survivability in the same industry. In the services industry, advertising investment causes a reverse effect on firm growth. This suggests that innovative activities should vary depending on the characteristics of each industry. The electronic version of this dissertation is accessible from http://hdl.handle.net/1969.1/149338
Book Synopsis Four Essays on Behavioral Economics by : Pleßner, Marco
Download or read book Four Essays on Behavioral Economics written by Pleßner, Marco and published by kassel university press GmbH. This book was released on 2017 with total page 7 pages. Available in PDF, EPUB and Kindle. Book excerpt: Key Terms: Behavioral Economics, Behavioral Finance, Experimental Economics
