Internal Lunch Seminars

(with Ondřej Krčál and Štěpán Mikula)

Theoretical models of social capital (David et al., 2010; Bräuninger and Tolciu, 2011) provide an explanation for the different outcomes of integration efforts documented by the recent empirical literature. The models show that communities may find themselves in two different equilibria, one with a high level of social capital and low outmigration or one with a low level of social capital and high outmigration. However, empirical tests of this explanation based on quasi-experiments typically suffer from the selection of immigrants which makes the identification challenging. In order to address this issue, we take the setup used in the theoretical models into the laboratory. We implement a treatment in which we change the initial level of social capital without affecting the equilibrium outcomes. In a finitely repeated game, most of the experimental communities end up in one of the two equilibria predicted by the theoretical models, with a higher proportion of the treatment communities attaining the equilibrium with a high level of social capital and low migration. This suggests that the initial levels of social capital might facilitate the effect of immigration on community levels of social capital.

(with Rostislav Staněk and Katarína Čellárová)

When lawmakers create laws, they must decide not only on the substance but also the form of the law. The choice of the legal form may be described as a choice between rules and discretion. Although the discretion may more efficient, recent studies suggest that individuals value institutions and procedures for their intrinsic value. i.e. beyond the expected utility associated with the achieved outcome. The aim of our experiment is to identify discretion aversion. Our design combines an effort provision experiment and a voting experiment. Despite the fact that discretion regime is more efficient than the strict rule regime in our experiment, subjects vote significantly more often for the strict rule regime. In order to distinguish whether the unpopularity of the discretionary regime is driven by the presence of the human factor, we ran additional treatment where the human officer is replaced by the computer. The discretionary regime remains unpopular even in the treatment with the computer officer.  

Calculation of retirement savings shows that vulnerable subgroup of the self-employed does not save enough to cover their pensions at an acceptable level. Their status in the Czech tax and savings system allows them, within limits, to choose their own level of savings. It might, therefore, be possible to provide a nudge to influence the decision making of the self-employed in order to increase their savings rate. An experiment to test the most promising route - to increase the information level - will utilize the life cycle experiment in ztree. Details of the experiment will be discussed in the presentation.

In spite of certain contradictory findings and missing details on the process itself, performance feedback literature can largely explain why and when the organization prefers change or rigidity. While understanding organizational behavior has enormous value, we are still unsure of its performance consequences. This research aims to contribute to answering the question of the relationship between responsiveness to performance feedback (intensity with which organization reacts to a given performance feedback message) and subsequent performance. Using data from U.S. manufacturing firms, the findings support the inverted U shape relationship between responsiveness and performance and the notion that less responsiveness is ceteris paribus preferred to equivalently more responsiveness.

The aim of my research is to investigate the relationship between financial literacy and behavior in the face of the growing challenge of FinTech. To do so, I personally set-up a financial education program for high-school students called “Futuro Sicuro” in order to understand if it could change financial habits among millennials. This program provides two types of randomized treatment at the class level, a theoretical rule-of-thumb based one with the presence of financial advisors, and a high digitized one based on the learn-by-playing rule through App and websites. The empirical research is carried out using personally collected data during the pilot of the program aforesaid involving 650 students.

Website

Food waste is a phenomenon associated with substantial economic (inefficient use and misallocation of resources) and social consequences (environmental impacts and consumption of limited resources). Food waste is caused neither by a single factor nor a single group, and (likely) is not resulting from intentional act such as “I like to waste food”. Certain percentage of food loss and even food waste is present in all stages of food chain. Yet there are significant differences in the food waste intensity along the food chain stages – with the final stages being major sources of food waste. The key culprit seem to be households’ behavior, despite the fact food waste is commonly viewed as undesirable. The research area of the project at hand is to design and empirically test procedures that would be applicable by subjects responsible for waste management (foremost municipalities), leading to a reduction of food waste through behavioral change. A field intervention experiment, targeting local population in Brno is the main method. The population is divided into three groups: control group, antecedent-intervention experimental group and feedback-intervention experimental group, with each group being represented by 4 different locations with presumed influential population characteristics.

In June of this year, an amendment to the Act on Employment Services came into force in Slovakia, to make the conditions for entitlement to a work-related allowance and a work mobility allowance more attractive. However, in addition to the costs of labor mobility also other determinants influence the decision-making of individuals on the allocation of time to the commuting to and from work. We quantify the average weekly time spent on commuting in the Slovak Republic at NUTS 2 level and identify the differences in the determinants affecting the labor mobility in the surveyed areas. From the source database, which is the result of a questionnaire survey conducted in April 2017, we use data on employed respondents aged 15-64 in a total of 1 537.

The support of the grant scheme VEGA 1/0621/17 “Decision-making Process of Slovak Households about Allocation of Time for Paid and Unpaid Work and Household Strategies’ Impact on Selected Areas of the Economic Practice”.

In Slovakia people traditionally devote lots of time to perform a variety of work in their households. However, a lot of goods and services, which households produce themselves, are offered by the market as well, so households can buy them, instead of doing them by themselves. On the basis of data obtained by a primary research done in Faculty of Economics Matej Bel University on the sample of 1,142 households, the types of housework which are mostly outsourced by Slovak household are identified. The main factors households perceive as important for making decisions about outsourcing housework and barriers to outsourcing them are also examined.

The support of the grant scheme VEGA 1/0621/17 “Decision-making Process of Slovak Households about Allocation of Time for Paid and Unpaid Work and Household Strategies’ Impact on Selected Areas of the Economic Practice”.

Waiters often pool their tips and in some restaurants, waiters do not get to keep their tips, but forfeit them to their employer. We use a variation of the dictator game to explore if and how these scenarios may affect tipping behavior if customers are aware of them. Lab experiment participants are divided into dictators and servers. Servers solve an effort intensive task and earn their dictator a lower or higher amount of money based on their performance (money earned is a proxy for service quality.) In the baseline treatment, dictators then decide if they want to tip their server and how much. In the pooling treatment, dictators decide if and how much to tip their server knowing that the tips will be pooled. In the third treatment, where waiters do not get to keep their tips, dictators choose if and how “big” and expensive a Thank you message to send to their server, knowing he will not receive any of the money it cost.

Tommaso Reggiani (Masaryk University) & Rainer Michael Rilke (WHU - Otto Beisheim School of Management

We investigate the influence of pro-social incentives on workers' labor supply in a natural field experiment. We recruited workers to take part in a survey for a fixed compensation. Having finished the survey, a bonus payment is offered in order to perform an additional optional task. In different treatments, the bonus payment generates (i) a standard private gain, (ii) an equivalent donation or (iii) different combinations of private gain and donation. We observe that high donations in combination with no or only small individual gains lead to negative or null effects on labor supply. Bonus combinations of small donations and generous private gains increase labor supply. Effort provision, as well as job satisfaction, are not systematically affected by the different incentive schemes. The experiment sheds lights on widely accepted claims that corporate philanthropy measures are effective tools to motivate employees. When firms consider the design of pro-social incentives schemes, they should be vigilant about employees' distributional concerns.

(joint work with Josef Montag)

This paper uses housing privatization in Brno as a quasi-experiment producing exogenous assignment of homeownership status. We do not find homeownership to be causing higher unemployment. In fact, our estimates are consistently negative and economically substantively, ranging from -3 to -8 percentage points. We find no evidence that homeownership lowers labor force participation.

Abstract: The lecture will focus on the concept of vigilantism in the strategies of far right groups in Slovakia as well as in the context of the response from the civil society initiatives. While in the case of far right groups we can see various examples of conventional vigilante strategies used as a tool of political struggle, the civil society is adopting especially diverse digital vigilante practices in order to actively challenge the presence of far right agenda in the public discourse. In both cases, the interaction of online and offline world will be explored, with special attention to the role of the government and state authorities in the equation. 

(Coffee and sandwiches will be available at the seminar)

Abstract: The ability to accurately estimate the duration of planned tasks is the cornerstone of successful time and project management. It is naturally appealing to expect that the accuracy of estimates increases with estimators' professional experience. However, contrary to the intuition, many companies keep estimating over-optimistically. Projects then run late and trigger budget extensions. We hypothesize that project time estimates can be influenced by anchors such as managerial suggestions or customer expectations. Suggestions driven by wishful thinking can cause the estimates to become too optimistic.  Moreover, in the absence of estimation feedback, the effect of anchor can persist over time and influence subsequent estimates of the same or similar task. Even when there is no anchor before the first estimate available, the first estimate itself can serve as an anchor for future estimates and cause systematic bias. We experimentally test the influence of numerical anchors on duration estimates of a simple real effort task. In addition, we test the interplay between anchor and task experience by repeating the task estimation and performance process in multiple rounds. We find strong anchoring effects which persist over time. We also find an evidence of a self-anchoring effect.

(Cake will be available from 12:40 with the seminar starting promptly at 12:50)

Abstract: The theoretical models suggest there is a negative relationship between social capital and migration (Glaeser et al 2002, David et al 2010, Bräuninger and Tolciu 2011). The simultaneity between investment in social capital and residential mobility decisions leads to an identification problem for empirical analysis. In this paper we exploit the post-war resettlement process in Czechoslovakia as a natural experiment to confirm the causal effect of social capital on residential mobility. After World War II over 3 million Germans (some 29% of the total population in Czech lands) were forcibly expelled leaving behind empty villages and their property. Abandoned lands were swiftly resettled with Czech inhabitants creating new communities in former German villages. Our identification strategy exploits the variation in migration behavior along the historical dividing line between formerly Czech (refereed to as old) and German (new) settlements. For the analysis we employ administrative data on changes of permanent residency in the Czech Republic during 1971–2015. Our results document the enduring effects of social capital destruction in the settlements influenced by the resettlement process. We show a consistently higher migration rates in the new communities vis-a-vis the old communities. A set of falsification tests validates the interpretation of the results.

Making sound financial decisions is an essential skill which can have an impact on life of each consumer of financial products. The aim of this paper is to examine decision-making concerning financial matters and personal finance. The selected target group was university students majoring in finance related fields.

This research will concentrate on studying the major pushing and pulling factors that underlie the decisions of Armenian students to pursue education abroad.

The contribution deals with the strategically important problems of metropolisation. In this context, it presents a theoretically based method of assessment of metropolises, the explanatory power of which was verified on the example of the Central Europe. This method is based on three components: population size (initial assumption), economic profile (ties to economic performance) and general attractiveness (the perception of development potential). The results of the evaluation of the 27 identified metropolises were generalized using a typology of their inclusion within the framework of the listed components: most metropolises were classified as type B – an established metropolis, followed by type C – an elementary metropolis, and type A – a dominant metropolis. A practically targeted conceptualization is then demonstrated on the example of the Czech Republic. The main attention was focused on the intensity of the economic links of Prague (and two further Czech centres) with other Central European metropolises. The corresponding complementary contribution is focused on verification of metropolisation axes on express/highspeed transportation modes.

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.

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.

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. 

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.

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.

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.

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.

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.

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.

In 2015, Czech Republic witnessed harsh debate about the future of lignite open-cast mining. The need of the price stability in district heating (DH) lignite power plants has been one of underlying argument in favor of mining continuation. DH delivers heating energy to roughly one third of Czech households relatively cheaply (compared to other sources). Thus the arguments such as “economic stability” of DH systems and the availability of cheap heat have been used frequently in the debate. Surprisingly enough, the actual micro-economic analysis of DH sector in Czech Republic is considerably underdeveloped. This paper aims to fill this gap. We focus at the power plants (PP) with combined output of heat and electricity of at least 100 TJ per year, where the heat production is dominant. This group consists of 36 PPs of variable characteristics (such as production capacity, ownership, consumer portfolio etc.). 9 of them have full economic data available open source. Despite the fact we find large inconsistencies in the data, we aim to calculate price and income elasticities of the PP in question and estimate the price-cost margins. There are multiple ways of approaching the elasticity estimations, but the initial look at the data indicates the results are likely highly dependent on the plant. For instance pooled estimate of SR elasticity is about -0.58, but if we allow for the fixed panel effects, we find the SR price elasticity −0.212. In the dynamic panel model distinguishing between SR and LR elasticities, we estimate the SR elasticity to be -0.086 and LR elasticity approximately -0.16. Given the peculiarity of the data, we do not primarily seek to generalize, but rather pinpoint what needs to done in further research.

Abstract: From the introduction of Brynjolfsson’s “Productivity Paradox” and Bannister’s and Remenyi’s “act of faith”, the scientists are tackling the challenge of evaluating intangible benefits of information systems. Not only companies are struggling with success of IT projects but they are usually unable to say, if the information system is proving to be beneficial. To this day, the solutions and suggestions are far from being useful or used, if the problem of evaluation of intangible benefits of information systems can be even solved. In order to try to organize the body of knowledge in this area, this talk will introduce and describe a preliminary taxonomy of information system evaluation methods and give some insights on current justification and evaluation practices that were gathered from interviews with practitioners during a case study.