Internal Lunch Seminars (Archive)
“Should I tell you / or should I not?” The (neutral) effect of Transparency on Information Disclosure NudgeLecturer: Tommaso Reggiani Affiliation: LUMSA University & IZA-Bonn Academic Club, ESF MU 1:00 PM • 3/22/2017
With the increasing popularity and application of the nudging concept, several ethical objections against it have also emerged. In order to contribute to the debate whether nudging is objectionable or not, this paper examines nudging in the light of transparency.
A transparent nudge is when the citizen being nudged knows the intention behind it and the means adopted to pursue the nudging object. A non-transparent nudge works in a way that the citizen cannot reconstruct the object of the intervention and the means by which the behavioral change is pursued.
Wide - philosophical - consent claims how nudging can only be regarded as ethically appropriate when the nudge is transparent (Fischer & Lotz 2014; Sunstein 2015). Hausman & Welch (2010) demand for nudging transparency, even if it potentially undercuts the effectiveness of the nudge. However, empirical research on nudging often shies away from incorporating explicit transparency.
We design a survey-experiment to examine whether transparency has negative impacts on nudging effectiveness in its configuration of information disclosure nudging (Loewenstein et al. 2014b; Altmann & Traxler 2014; Wisdom et al. 2010). In partnership with the German Federal Centre for Health (BZgA), we address the very salient and relevant case of the voluntary participation into the German organ donation initiative. We do not find evidence that transparency inhibits the effectiveness of information disclosure nudges. Our finding supports the policy-relevant claim that information disclosure nudges can be transparent and yet very effective, reconciling at the same time philosophical problems. This result is in line with recent findings by Bruns et al. (2016): In a lab experiment, focusing on default nudge applied to contributions to carbon emission reduction, they do not find evidence that transparency inhibits the effectiveness of a default nudging strategy. Similarly, Loewenstein et al (2014a) testing the interaction between transparency and defaults, get to similar conclusions according the analysis of an online-study focused on health-care related choices.
Price Transmission and Market Power in a Vertically Integrated Industry: Evidence from the Hungarian Gasoline MarketLecturer: Richárd Farkas and Biliana Yontcheva Affiliation: University of Pécs, Vienna University of Economics and Business Academic club 12:00 PM • 3/13/2017
The pricing behavior of vertically-integrated firms is a heavily investiga- ted topic in economic literature. While most research in this context focuses on network industries, the present paper investigates a similar set-up on the retail gasoline market. We provide the first examination of asymmetric cost- pass through on a gasoline market with a dominant upstream firm which is also active as a retailer. Furthermore, we differentiate explicitly between local markets on which the firm is present exclusively as a wholesale seller and those on which it participates at both market levels.
While upstream competition is common place on the US market, in Europe gasoline wholesale tends to be dominated by recently privatized large pro- ducers, which are also active in the retail market. The optimal behavior of such upstream monopolists facing competition downstream has been subject of rigorous academic debate. On the one hand, such a firm has an incentive to exercise its power by passing on cost changes asymmetrically and sustai- ning high prices in order to raise its competitors’ costs (Salop and Scheffman, 1983). Such firms are likely to combine this wholesale strategy with aggres- sive pricing at the retail level in order to push competitors out of the market. Conversely, the firm may choose to set low prices and transmit cost changes quickly if it seeks to foster demand downstream, even if this increase in de- mand for the product is detrimental to its own downstream business. Sibley and Weisman (1998) argue that such a firm will be willing to forfeit per-unit profitability in order to increase overall sales volume, hence resulting in in- significant anti-competitive behavior.
We investigate this process empirically using weekly data for over 900 stati- ons for two years from the Hungarian gasoline market. An error correction model is estimated to measure the speed and asymmetry of cost pass-through at the wholesale and retail level. We find that a firm with a dominant up- stream position is likely to charge high prices on the wholesale market and act competitively at the retail level. This applies both to mark-up levels and to the level of asymmetry in cost pass-through.
While upstream decisions affect all firms equally, the influence of retail pri- cing behavior is likely to wane with distance. In order to determine how the aggressive retail pricing scheme of the firm will affect its rivals, we analyze a) the local market characteristics in areas where a retail outlet of the upstream monopolist is present and b) the pricing behavior of competing stations in those markets. This allows us to determine what type of market is most likely to be affected by the presence of the vertically integrated seller, as well as what the precise effect on pricing is likely to be. The analysis of the results allows us to determine to what extent the disciplining retail effect of the monopolists’ competitive pricing offsets the negative effect of his wholesale mark-up.
Killing two birds with one stone: Reducing fiscal and welfare loss of tax evasionLecturer: Ondřej Krčál, Rostislav Staněk Affiliation: Masaryk University Academic club, ESF MU 12:00 PM • 2/8/2017
Tax evasion constitutes a fiscal loss to the tax authority and a welfare loss for the society because it induces socially wasteful activities during which taxpayers spend real resources in order to hide their undisclosed income. We develop a theoretical model that explores the effect of audit selection rules on the losses from tax evasion. In the proposed experimental design, we test the main prediction of the model, that the competitive audit selection mechanism reduces both the fiscal and welfare loss of tax evasion. Furthermore, our model shows that a higher basic audit probability motivates taxpayers to increase their socially wasteful activities. Our experimental results confirm the predictions of the model. Our paper shows not only that the competitive audit selection mechanism provides an additional benefit if socially wasteful activities are possible, but also its relative advantage compared to an increase in the audit probability.
Old sins cast long shadows: Long-term effects of Aussiedlung of ethnic Germans from Czech Republic on migrationLecturer: Štěpán Mikula, Alžběta Hanáčková Affiliation: Masaryk University Academic club, ESF MU 12:00 PM • 12/5/2016
There were over 3.000.000 (29 % of total population) of ethnic Germans in current Czech Republic prior to the Second World War living mostly in ethnicaly segregated villages of Sudetenland -- German-speaking regions often close to national borders. They were forcibly expeled after the end of the Second World War leaving behind empty villages and almost all their personal belogings including fully-equipped farms and factories. Abandoned lands were swiftly resettled by over a million colonizers from inland regions of Czechoslovakia (current Czech Republic and Slovakia) creating new communities in former German villages. Expulsion (Aussiedlung) and resettelment created a shock which allow us to identify differences in migration behavior between newly established and traditional communities. Empirical results indicate that emigration rate in former German villages is significantly higher even 70 years after Aussiedlung.
World Tax Index: What is the real tax burden?Lecturer: Jakub Buček, Zlatica Konôpková Affiliation: Masaryk University Academic club 12:00 PM • 11/1/2016
The World Tax Index (WTI) combines hard tax data available from world-respected sources and national tax laws with soft data expressing Qualified Expert Opinion (QEO). The QEO is gained from annual large-scale questionnaire survey conducted among tax specialist from all OECD countries. The methodology of creating WTI and questionnaire were rebuilt this year and the pilot was sent to the experts in the Czech Republic.
Transformation of Labour Market in Europe and Voting for Far-Right and Far-Left PartiesLecturer: Jitka Doležalová, Hana Fitzová Affiliation: Masaryk University Faculty of Economics, Masaryk University, Academic club 12:00 PM • 10/10/2016
The literature suggests that there is a significant gender gap in the support of far right parties. Male voters exhibit a higher propensity to voting for them. The probability of voting for these political parties is even higher with young and pensioner males. Far right voters are overrepresented among manual workers, routine non-manual workers, the self-employed and the unemployed. The voters usually have lower level of education and are less skilled. All these findings are based on social-survey data. Are they consistent with hard economic data, however? In order to answer this question, we analyse the set of 28 EU member states from 2000 to 2014. We extend our research to voting results of far right, far left and populist parties in parliamentary elections. We focus on diverse specifications of employment rates which are offered by the Eurostat database (by gender, age, education attainment, occupation, working time, etc.). In our model, we also include other variables of the labour market, economic activity, and variables in demographics and politics. We estimate the Heckit model with the maximum likelihood estimator because of many left censored dependent observations. During the observed period, Europe was affected by three phenomena: structural changes in the labour market, the aging of population and an economic crisis. The number of economically active men between 15 and 39 years of age diminished, many of them lost their jobs during the economic crisis and they have a lower chance of going back to work in the future because of their lower skills. They may feel frustrated and therefore turn to extreme and populist parties.
Optimism bias: The evidence from betting marketLecturer: Rostislav Staněk Affiliation: Masaryk University Academic club, ESF MU 12:00 PM • 5/5/2016
People often exhibit so called optimism bias. When predicting what will happen in the future, they overestimate a likelihood of postitive events and underestimate a likelihood of negative events. This paper shows that there is an evidence of an optimism bias in the betting market. I model optimism bias as an elevation in the probability weighting function. Using data from Czech bettingmarket I estimate how the elevation di ers between league matches and matches of the Czech national team. The results show that Czech bettors are overly optimistic when predicting the outcome of Czech national team match.
Fiscal Multipliers and the Zero Lower BoundLecturer: Miroslav Hloušek Affiliation: ESF MU ESF MU, Academic club 12:00 PM • 4/28/2016
This paper studies implications of the zero lower bound (ZLB) on interest rates for the size of fiscal multipliers. The analysis is carried out in extended ECB’s New Area-Wide Model that contains various fiscal instruments. The results show that the most effective tool of fiscal policy at ZLB is government consumption. If the economy is expected to stay longer in liquidity trap, this multiplier is much higher and can exceed value of two. Behaviour of multiplier for government investment is rather tricky. Its value is amplified but only when the economy stays at ZLB for few years. Very significant amplification effect was found for consumption taxes multiplier, but its value stays below unity. Also government transfers multiplier increased a lot in relative terms, nevertheless its absolute value remains very small. Other fiscal instruments were influenced only negligibly.
Collateral constraint, asymmetries and zero lower boundLecturer: Miroslav Hloušek Affiliation: ESF MU ESF MU, Academic club 12:00 PM • 4/20/2016
This paper deals with asymmetry between house prices and consumption that is present in data of the Czech economy. We use small open economy model with housing sector and collateral constraint on loans. The model is estimated by Bayesian techniques on Czech data and then simulated with toolbox for occasionally binding constraint. The mechanism works as follows. When the price of houses decreases, the value of collateral drops down and households are forced to reduce their borrowing and consumption. When house prices increase, households’ constraint becomes slack and consumption increases only partly. The asymmetrical relationship between the house prices and the consumption obtained from simulations thus confirms the empirical findings. The contribution of the zero lower bound on interest rate was found insignificant as the fluctuations in house prices have negligible effect on behaviour of interest rate which equilibrium level was also quite high.