Research Seminars

We examine the CEO career consequences following shareholder activism in their companies. To address endogeneity, we employ a control function approach, using expected mutual fund flow-induced sales and purchases as exclusion restrictions. We show that CEOs targeted by activists are more likely to be dismissed earlier and less likely to retain internal executive board positions than non-targeted CEOs. We also find significant decreases in their remuneration, while their outside board seats remain unaffected. These effects vary across campaign hostility, activist types, and CEOs’ ex-ante resistance. Hostile campaigns and campaigns involving hedge funds impose more adverse career effects, though anticipated CEO resistance deters activism and mitigates negative effects from hedge fund involvement in non-hostile campaigns.

The Paris-Lyon line is the busiest High-Speed Line in Europe and has been open to competition in open access since December 18, 2021. The main objective of the paper is to explore the effects for users with respect to price and frequency compare with the existing literature. The analysis is based on a large database (n = 1243) collected by web scraping from September 2019 to October 2022. The method relies on a descriptive analysis with a similar route without competition (Paris-Bordeaux) in the comparison group. The results highlight an increase of frequency by 15% and a decrease in price by 23%. The prices charged by the newcomer are lower than those of the incumbent (−30% to −50%). The comparison with the control route suggests a positive effect on price that moderates the economic catch-up effect following the COVID-19 pandemic in an inflationary context. More specifically, SNCF appears to take a wait and see attitude to competitive pressure from Trenitalia. It has moderated its prices since the new offer was introduced and has maintained its trains.

Microsimulation models have become indispensable tools in evaluating the dynamic impact of policy interventions across Europe, the United States and other countries. This seminar introduces the principles and advantages of policy microsimulation, with a particular focus on the European Future Elderly Model (EUFEM).

EUFEM enables the integration of longitudinal and cross-sectional data to simulate the consequences of policy interventions in healthcare, labor markets, and social protection systems.

Drawing on results from recent applications—including disease burden estimation, LTC policies and prevention startegies—this talk illustrates how EUFEM supports policy evaluation in a controlled, data-rich environment. Particular attention will be paid to methodological choices, validation strategies, and the challenges of aligning health and economic models with real-world applications, e.g. in heart disease, diabetes, obesity and other areas.

In today's world, social media is a major source of information for many people. However, not all information on social media is accurate, and misinformation can spread quickly, especially on important topics like climate change. This study aims to examiner how social media message formats (text, picture and video) affect climate change perception and behaviours. A mixed-method study with participants from UK and Mexico was conducted. The study found that misinformation reduces the credibility of social media posts in all formats (text, picture, video). Accurate posts about climate change prompted people to think about taking action to protect the environment. In contrast, misinformation posts made some people believe that climate change is not caused by humans and therefore not their problem to fix. Finally, it was found that higher social media literacy generally helps people recognise misinformation, especially in pictures. However, surprisingly, those with higher social media literacy might find video misinformation more credible. The study significantly advances our understanding of the interplay between message formats, misinformation, and social media's impact on climate change perceptions.

We show that external suppliers are critical for facilitating machinery investments and capturing the skill bias of new machines. Linking firm data on capital investments, buyer-supplier transactions, and worker skills in Belgium, we find that the adoption of new machinery by manufacturing firms strongly increases the skills demanded from external suppliers. By contrast, the machines do not alter the skill mix of in-house employment. The skill bias of external suppliers reflects machine integration initially and machine-complementary services eventually. External integrators are especially important for smaller manufacturing firms, and the skill bias of investment depends on the capital type and application sector. Our findings help reconcile recent firm-level studies of in-house employment with long-standing theories of capital-skill complementarities

This paper develops a welfare and public economics perspective on optimal policies for carbon removal and storage (CDR) in permanent and non-permanent sinks. Non-permanent CDR reduces mitigation costs, even though the stored carbon is released into the atmosphere eventually. It may serve as bridge technology until permanent CDR becomes available. In contrast to permanent removals, non-permanent CDR does not reduce the optimal long-run temperature level. Its valuation differs from the social cost of carbon since a social cost of carbon removal arises from marginal damages caused by emissions released from non-permanent storage. We discuss three policy regimes that ensure optimal deployment of non-permanent CDR in terms of their informational and institutional requirements for monitoring, liability, and financing.

This paper investigates whether tax evasion can be beneficial for an optimal income tax schedule. Past theoretical discussions have presented mixed outcomes as to whether allowing taxpayers to opt into uncertainty could indeed enhance overall tax revenues. In this study, we conducted an original real effort experiment in an online labor market with almost 1,000 participants to test this hypothesis empirically. Our findings show significant positive labor supply responses to the opportunity to evade (increased labor supply by 37%). More importantly, the expected tax revenue significantly and substantially increased by up to more than 50%. Strikingly, this effect persists when comparing effective tax rates: Lowering effective tax rates through probabilistic enforcement (the opportunity to evade) is more efficient than simply lowering statutory tax rates. Our findings suggest that the opportunity for tax evasion can increase tax revenues beyond what a corresponding decrease in nominal rates would achieve.

Exploiting the 1848 revolution in the Austrian Empire, I study how a sudden institutional change impacts economic development. In contrast to much existing research, which focuses on the rule of law and the security of property rights, I argue that the main impact occurred through the expansion of the upper-tail useful human capital (Mokyr, 2005) following the revolution. While the revolution was defeated, important liberalizing reforms persisted in the areas of (i) the press, (ii) technical education and (iii) knowledge-promoting voluntary associations – the information space, for short. Pushing back against the existing consensus that the revolution had no discernible impact on the empire’s economic development, I combine newly collected data on the pre-1848 and post-1848 information space with data on the use and location of steam engines in 1841–1863 to establish the causal link between the post-1848 reforms and the diffusion of this important industrial technology.

While risky choice under time pressure is a topic that has attracted much attention in the literature, the effects of time pressure on risk attitudes seem to be poorly understood. In this paper we present evidence from an economic experiment where participants have to allocate an experimental income to two risky assets, with and without time pressure. We assume Rank Dependent Utility preferences, where risk attitudes are captured by both the utility curvature and the probability weighting function. Using the allocation data, we fit structural models which allow us to disentangle the effect of time pressure on the two components of risk attitudes. We then correlate the risk attitudes to various demographic and personality traits.

In this paper, we estimate the rise in smoking prevalence in East Germany caused by exposure to West German TV, with a focus on gender differences. We leverage survey data on smoking prevalence from 1989 (before the fall of the Berlin Wall) and 2002 (twelve years following reunification) and exploit exogenous variation in exposure to the West German TV signal to identify the causal effect. We document that exposure to West German TV increases smoking prevalence, but this rise is concentrated entirely among women, with a negligible impact on men. Our estimates imply a 10.5 percentage point increase in the probability of smoking among women and a 70.7% increase in the number of cigarettes smoked. These findings are robust across various tests and suggest that the convergence in smoking rates between men and women will likely lead to an increase in women's mortality and healthcare costs.

This paper provides a comprehensive assessment of the impact of education finance on students’ long-term outcomes and the mechanisms through which these effects operate. For identification, I exploit an intergovernmental transfer reform in Norway, which generated exogenous variation in school funding based on the school-aged demographic composition at the local level in the mid1980s. The main takeaway is that exposure to an additional $100 per pupil in education funding over nine years of primary and lower-secondary school leads to nearly $250 in higher annual earnings. This effect corresponds to an Internal Rate of Return (IRR) greater than 6% and a Marginal Value of Public Funds (MVPF) ranging from 1.5 to 2.5. The increase in earnings is mediated by higher educational attainment, higher likelihood of obtaining a degree in high-paying fields, and improved cognitive abilities. The effect is larger and more significant for students from low-educated parents and those at the lower end of the earnings distribution, while no significant impact is found for students with at least one college-educated parent. At the municipal level, the funding shock led to an increase in teacher hiring without affecting capital expenditures.

Cost of medicines is on an exponential rise and the pressure towards speedy access to medicines comes from all directions: pharmaceutical industry, patients, clinicians, politicians, and ultimately, the public. In Europe, standard reimbursement of a medicine typically requires efficacy approval from the European Medicines Agency (EMA), clinical and cost-effectiveness assessment of a Health Technology Assessment (HTA) body, and decision by a national regulator. With the intention to provide speedy access, efficacy evidence standards are often lowered in the name of hope that the given medicine may bring about clinically meaningful benefit nonetheless. This shift brings significant uncertainty into clinical and pharmaco-economic assessments, and ultimately into decision-making.
Using the example of a cost-utility analysis of an advance therapy medicinal product (ATMP) for spinal muscular atrophy, I will illustrate a prototypical case of modelling uncertainties. These uncertainties include the use of incomplete data sets, short-term data cut-offs used for long-term extrapolations, or challenges with discounting rates for benefits and costs of chronic conditions. Further challenges include modelling based on data from single arm trials, modelling with numerical values without statistical significance, label approved by EMA for a wider population than included in the clinical trials, or the question of selective approach to the inclusion of indirect costs.
This shift leads to a number of open normative questions such as: who is to pay for the cost of uncertainty? How should we set up willingness-to-pay-thresholds? What will be the role of the new European regulation on HTA (2021/2282)? How to prevent the public from paying thrice: for basic research of medicines, for the actual patented treatment, and for post-market evidence generation?

Previous evidence on the sunk cost fallacy primarily comes from laboratory or online experiments in which the sunk cost consists of a single upfront payment. In this paper, we study sunk cost effects in a highly relevant field context (exercising), where sunk costs may be dispersed over time and influence habit formation. In particular, we investigate how a (random) two-month discount on the membership fee affects the exercising behavior of new members of a large fitness chain and test whether individuals mentally account for the timing of this discount, i.e., the dispersion of sunk costs over time. The experimental design allows us to exclude any selection into discounted memberships and thereby isolate potential sunk cost effects. Despite a highly powered design, we do not find any evidence of sunk cost effects. These results cast doubt on the relevance of the sunk cost fallacy in the health domain. They also suggest that the common practice of offering discounts on membership fees does not undermine habit formation.

Despite the vast medical literature on the health effects of menopause, its economic implications remain understudied. During women's reproductive years, hormones like estrogen are protective of health. Menopause, associated with a gradual yet pronounced decrease in estrogen, induces a distinct change in women’s health trajectory that may have an impact on employment. This paper uses detailed data on the reported natural age of menopause for women in the Health and Retirement Study (HRS) to estimate the impact of menopause on health and employment. To address issues in identification that arise when analyzing menopause, such as confounding factors and measurement error, this paper uses the genetic predisposition for the timing of menopause, specifically the associated polygenic risk score (PGS), as an instrument for the reported age of natural menopause. There are three principal findings. First, consistent with the medical literature, crossing the menopause threshold there is an economically substantive and statistically significant acceleration in health conditions. The decline in health is more than triple that for pre-menopause years. Second, menopause is associated with a substantial reduction in the likelihood of working for pay by just under 2 percentage points every year after menopause, which accumulates to an 18 percentage point reduction in ten years. Combining these estimates, the associated IV estimate of the impact of health on employment indicates that the diagnosis of an additional medical condition reduces the likelihood of working for pay by between 49 to 77 percentage points depending on the exact specification. This is a substantial effect given that 78% of women work for pay prior to menopause. The key take-away is that essentially an additional diagnosis of a medical condition results in exit from employment for middle age to older women.

This study explores how, when income inequality is perceived to arise from both effort and luck, excuses (self-serving belief distortions) can influence acceptance of inequality. In a controlled laboratory setting involving a real-effort task, participants make redistribution decisions between themselves and a partner. The study varied the degree of uncertainty about the role of effort and luck in determining initial earnings endowments. Belief elicitations indicate that increased uncertainty caused participants to be more likely to attribute their partner’s success to luck. Furthermore, the use of excuses (attributing others’ outcomes to luck) was found to reduce willingness to redistribute earnings to their partners. These findings highlight how excuses about the role of luck versus effort may contribute to the persistence of inequality even if many individuals have meritocratic principles, and how variation in the degree of uncertainty about the causes of inequality, across individuals or societies, may contribute to different degrees of biased beliefs and inequality. The paper also shows evidence of excuses in another sense: According to a structural model of fairness views, individuals tend to adopt a fairness view – egalitarian, meritocratic, or libertarian – to justify an allocation that benefits themselves.

Does having children make you lose your mind? This study investigates the causal relationship between the number of children and the risk of dementia among parents, addressing longstanding questions about how parenthood shapes cognitive health in later life. Using comprehensive administrative data for all parents born in Sweden between 1920 and 1950, we derive completed fertility from multi-generational registers and identify dementia onset through in-patient registers and cause-of-death records. To estimate causal effects, we apply instrumental variable (IV), leveraging quasi-experimental variation from offspring sex composition and twin births, and within-family designs in survival models. Baseline associations reveal a U-shaped gradient between the number of children and dementia risk, with significantly higher risks for childless individuals and those with more than three children. However, IV and within-sibling estimates indicate no adverse effects of having multiple children on dementia risk, and suggest that parenthood generally reduces dementia risk. These findings challenge recent studies that report accelerated cognitive decline with higher parity, suggesting that observed risks are driven by confounding factors. Further analyses explore potential mediators, including educational attainment, labor market outcomes, and social/geographical proximity to offspring, highlighting how midlife motherhood penalties attenuate the protective effects of parenthood for women.

We investigate howchoosingone of two products influences beliefs about their quality. Ina laboratory experiment, we deal with the endogeneity in choices by carefully constructinginformation that we provide to participants. This information is both sufficiently clear to allowus to predict choices and sufficiently unclear to leave room for participants to distort their beliefsabout product qualities. Simultaneously, we vary the choice set and whether participants —after viewing both products — can choose a product or simply have one of the two productsassigned to them. We find that choosing to own a product — rather than passively owningit — increases the perceived quality gap between owned and non-owned products (i.e., thechoiceeffect). Thischoiceeffectis driven by non-chosen products. In particular, rejecting aproduct causes it to be perceived as worse than if that same product was simply not assignedto be owned. We show that having participants focus on product qualities before making theirchoice eliminates thechoiceeffect, suggesting that attention is an important driver. Thechoiceeffectexplains several empirical observations and provides support for active choice policies overopt-out defaults.

We investigate how having children impacts the quality of couples’ relationships, a proxy of the non-material gains from being in a relationship. Using a novel measure of relationship quality (RQ), we perform a dynamic difference-in-differences estimation around the birth of the first child. We find a sharp and lasting decrease in RQ immediately after birth. We attribute this effect to changes in household specialization. Traditional gender based specialization prevails after birth, regardless of the baseline distribution of tasks within the couple. Leveraging heterogeneous changes in household specialization after birth, we find that couples undergoing larger rearrangements also suffer larger RQ drops.

The proliferation of standardized testing has raised concerns about its distortionary effects on both school and student behavior. While previous literature has extensively documented high-powered misconduct by teachers and administrators, there is little systematic evidence on how exam pressure may lead students to commit academic dishonesty. This paper investigates interpersonal student cheating during high school exit exams in Vietnam, a setting where educational success is highly coveted. Using individual-level data from a large province, I leverage the quasi-random assignment of students to test rooms to estimate peer effects on test day. I find that students from low-ranked schools performed better when taking exams with students from elite schools. High-achieving elite peers are particularly valuable. However, the gains were concentrated in multiple-choice and quantitative tests but absent in essay exams. Moreover, the positive effects virtually disappeared after a testing overhaul increased the stakes of the exams. Backed by institutional details, these suspicious patterns provide credible evidence that discreet interpersonal cheating was once prevalent: non-elite students quickly formed networks with elite peers to cheat for their own benefit. It took a major reform to reshape student incentives and eliminate this malpractice

This study examines how parental religiosity influences children’s education. Using Turkish census data for primary-school completion outcomes of individuals born in 1924-1984 and withinyear variations in fasting duration across provinces as a proxy, I find that a 30-minute increase in daily fasting during the enrollment year reduces primary school completion by 0.37 to 0.80 percentage points, with stronger effects for females. These results are not driven by income or teachers’ beliefs. Cumulative exposure to Ramadan before school enrollment confirms these findings. Parental religiosity has consequences for gendered outcomes, including fertility and labor market participation.

How do ties with elite peers affect the social mobility of non-elites who have historicallyfaced social exclusion? Using novel data on high school and university graduates in five colo-nial Indian provinces between 1894 and 1921, I examine the effects of elite peers, defined asupper-caste students, on non-elites in high schools and colleges. Exploiting the plausibly ran-dom variation in the share of elite peers across all graduating cohorts within the same schools,I find that exposure to more elite peers reduces the probability that non-elite graduates, par-ticularly those from merchant castes, complete university or become lawyers. These effectsare driven by social rank rather than economic differences between elites and non-elites. Thenegative effect is strongest in private schools run by local Indian elites and among college stu-dents graduating with the highest grades in their high school examinations. Overall, the resultssuggest that exposure to elite peers in settings with significant social distance between elitesand non-elites may hinder rather than foster upward mobility among non-elites.

The declining share of the working-age population (20-64) has led many countries to introduce social security reforms to extend the working lives of older employees. While reforms such as raising the early retirement age can effectively achieve this goal, they are often perceived as forced. Partial retirement schemes, which allow individuals to work part-time while receiving a significant portion of their previous wages, offer a more flexible alternative. However, the impact of these schemes on overall labor supply remains ambiguous. On one hand, partial retirement may increase labor supply by encouraging part-time work over early retirement; on the other, it may reduce labor supply if full-time workers choose to shift to part-time work. This paper investigates these effects by studying the introduction of a partial retirement scheme for central government employees aged 61-65 in Sweden. The findings show a 6.5%drop in average earnings, suggesting that generous partial retirement terms, which replace a substantial share of prior income, incentivize a shift from full-time to part-time work, thereby reducing the overall labor supply.

Guilt Aversion and Inequity Aversion are pivotal concepts in understanding human behavior in situations involving trust dynamics. Inequity Aversion explains trustworthiness through a preference for fairness, as trustworthiness leads to more equitable distributions. Conversely, Guilt Aversion posits that people act to avoid the guilt associated with betraying others. As both preferences provide justifications for trustworthiness, distinguishing between them solely through observed behavior poses a significant challenge. In this work, I aim to disentangle the effects of Guilt and Inequity Aversion to identify the main driver of pro-social behavior in a theory-driven experiment based on the trust game. I show theoretically that by increasing the stakes for the trustor, the two preferences have opposite predictions on trustworthiness. The experimental design, informed by this theory, features a doubling of the trustor’s payoffs. The results indicate that the preferences for equality are the main determinants of trustworthiness.

A growing body of financial research shows that machine learning–based algorithms consistently outperform traditional financial benchmark models, often yielding significant statistical and economic advantages. However, the prevailing hypothesis within this literature is that these algorithms can replace—rather than complement—fundamental financial analysis. In this research, we explore how machine learning methods can enhance standard quantitative financial models, including well-known capital asset pricing frameworks such as CAPM, FF3, and FF5. In particular, we apply Elastic Net and Random Forest methods to statistically calibrate these financial models, using the traditional OLS approach as a benchmark, for monthly data of S&P sectors from 2000 to 2024. Surprisingly, our findings indicate that out-of-sample predictive performance is largely similar across most statistical methods, effectively ruling out Random Forest as a compelling alternative. Notably, the traditional CAPM with linear regression performs quite well and, given its low computational demands, remains a cost-effective forecasting tool. In conclusion, given the random-walk nature of financial returns, allowing for nonlinearity and interactions does not notably enhance predictive performance.

Extant literature proposes and finds empirical support for both a positive and a negative relationship between market integration and pro-sociality. According to a first strand of literature, market interactions help develop generalized pro-sociality, which extends to complete strangers the sense of particularized pro-sociality that is normally reserved to one’s family, clan, or kins in traditional societies. A second strand of theoretical literature posits that market interactions erode altruism. We test the relationship between market integration and tolerance of inequality – one relevant aspect of pro-sociality – in 30 villages of Bougainville, Papua New Guinea. Since this society is transitioning from self-subsistence to market integration, it provides a suitable setting to test the above hypothesis. We measure tolerance of inequality through the “power-to-take” game, in which two players with different initial allocations make a proposal over how to divide the sum of initial earnings. We measure market integration through the share of calories coming from market purchases vis-à-vis self-subsistence.

Overall, we find no significant relationship between market integration and tolerance of inequality. Rather, behaviour seems highly variable in each village groups. We find propensity for either egalitarian or non-egalitarian divisions both in relatively highly integrated and little integrated villages. Nonetheless, greater market integration seems to affect social norms justifying inequality and other mechanisms supporting cooperation.

International trade flows show strong persistence over time. This is true for yearly data and even more so for higher-frequency data such as monthly data. Standard gravity theory cannot explain the persistence, i.e., why lagged trade flows should enter as an explanatory variable. While some dynamic gravity models have been explored, the dynamics in these models are either driven by country-specific factors (such as capital accumulation or technology) or ad hoc (like assuming bilaterally specific capital). We provide a structural dynamic gravity framework where the persistence stems from firms’ sluggish adjustment of destination-specific prices, akin to sticky pricing a la Calvo (1983). Our theoretical framework provides a micro-foundation for a gravity equation with lagged trade flows as an explanatory variable. Using OECD trade data at high and low frequencies, we document the persistence of trade flows and estimate the parameter governing the share of firms that sluggishly adjust prices. Consistent with the literature on nominal rigidities, we find a high degree of price stickiness at monthly frequency and a lower degree at annual frequency. Our results help to explain the propagation of trade cost shocks to trade, prices, and welfare over the short and long run.

Note: This study has been conducted in collaboration with Mario Larch and Dennis Novy.

Individual preferences for a specific majority threshold can be influenced by voters’ attitudes toward uncertainty. It has been theoretically demonstrated and experimentally verified that a higher majority threshold is associated with risk aversion, serving as a means to protect against the tyranny of the majority (Attanasi, Corazzini & Passarelli 2017). In this paper, we posit that the absence of ex-ante information regarding the likelihood of the voting outcome introduces an additional layer of uncertainty - namely, ambiguity - which motivates decision-makers to seek increased protection.

We model the impact of both the level of ambiguity and ambiguity aversion on the desired majority threshold of a voting lottery in a KMM environment (Klibanoff, Marinacci and Mukerji 2005). We assume that as the number of voters increases, so does the level of complexity – and consequently, the ambiguity – of the voting lottery, which in turn activates ambiguity attitudes. We test our predictions through a series of 32 classroom experiments conducted between 2020 and 2024, involving approximately 1,200 undergraduate and graduate students in Italy and France, with voter group sizes ranging from 7 to 281.

Our findings confirm a positive correlation between risk aversion and the desired majority threshold. Additionally, we provide support for our two novel predictions: first, that the desirable threshold is positively correlated with ambiguity aversion, and second, that it increases with the number of voters through this channel. These results highlight the significance of ambiguity in strategic voting.

We estimate the long-run labor market and health effects of breast cancer among Austrian women. Compared to a random sample of same-aged non-affected women, those diagnosed with breast cancer face a 22.8 percent increase in health expenses, 6.2 percent lower employment, and a wage penalty of 15 percent five years after diagnosis. Although affected women sort into higher quality jobs post-diagnosis, this is offset by a reduction in working hours. We argue that the hours reduction is more likely driven by an increase in the time preference rate, meaning that patients increasingly value the present over the future, rather than by an incapacitation effect or employer discrimination.