with Donald Tomaskovic-Devey and others
Proceedings of the National Academy of Sciences (2020)
Press coverage: Ungleichheit der Einkommen steigt (ORF, May 1st, 2020)
Work in Progress
Motivated Beliefs about the Success of Third Parties to Excuse Self-interested Behavior
In short: People are selfish./Excuses can help not to face it./In the lab, someone can mitigate negative consequences./Being optimistic about this person can be an excuse./People use this.
This paper examines whether people distort beliefs about third parties – such as the ability of scientists to offset one’s environmental impact – to excuse self interested behavior. I set up a lab experiment in which dictators decide how much money to take, with the success of a third party in solving a puzzle determining whether the money comes from passive participants or another source. The experiment exogenously varies whether it is the success or the failure of the third party that results in taking the chosen amount from passive participants. After participants decide the amount, they report their beliefs about the success of the third party. I find that the proportion of participants believing in the success of the third party is 13 percentage points higher when the success of the third party results in taking the money from a different source. With monetary incentives for correct beliefs, this effect goes down to 6 percentage points and becomes insignificant. This means that the presence of a third party might result in even more self-interested behavior than it has been previously thought.
with Kinga Marczell
In short: Managers have health shocks./Most managers go back being managers./It increases separation rate for suboordinates./This is mostly firing./It stays like that.
We analyze the consequences of managers’ health shocks on the separation rate of their employees. We hypothesize that previous illness experience of division leaders may affect their attitudes towards their employees. Using an event-study approach combined with matching, we compare the separation rate of employees assigned to managers before and after the managers’ illness episode. We find that separation rate increases by 8% after the manager’s illness episode, mostly driven by dismissals as opposed to voluntary leave. Regarding managers’ own employment outcome, adverse employment effects are present even four years after the illness episode. While 18.23% of previously ill managers has no job by this time, the corresponding ratio is only 13.02% for the control group. Managers staying at the firm experience on average a 13.4% wage drop compared to their matched healthy counterparts in the year following the illness episode.
Holding a Porfolio and Wishful Thinkingwith Balázs Krusper
This paper investigates whether people distort their beliefs about ambiguous outcomes of products as a result of owning them. We set up a lab experiment where people have to form beliefs about portfolios’ payoff probabilities. The experiment exogenously varies whether the good, or the bad portfolio is assigned to the subject. We find when subjects hold the portfolio they have a 2.75 pp higher belief about its payoff probabilities than when they don’t hold the portfolio. This effect is significant on a one-sided test. The study also tests for asymmetric belief updating, effects of changing payoff size, and changes in incentives for correct guessing. We find neither sign of differential belief updating, nor an effect of changes in incentives for guessing correctly. When the amount the portfolio pays off is increased, there is less of an effect of owning it. This is hard to reconcile with the current theories, however, disappointment aversion might be a plausible explanation.