Beliefs about overconfidence

This experiment elicits beliefs about other people’s overconfidence and abilities. We find that most people believe that others are unbiased, and only few think that others are overconfident. There is a remarkable heterogeneity between these groups. Those people who think others are underconfident or unbiased are overconfident themselves. Those who think others are overconfident are underconfident themselves. Despite this heterogeneity, people overestimate on average the abilities of others as they do their own ability. One driving force behind this result is the refusal to process information about oneself: not only does this lead to overestimation of one’s own ability, but by means of social projection also to overestimation of others’ abilities.     

Beneficial safety decreases

We construct a model of rational choice under risk with biased risk judgement. On its basis, we argue that sometimes, a regulator aiming at maximising social welfare should affect the environment in such a way that it becomes ‘less safe’ in common perception. More specifically, we introduce a bias into each agent’s choice of optimal risk levels: consequently, in certain environments, agents choose a behaviour that realises higher risks than intended. Individuals incur a welfare loss through this bias. We show that by deteriorating the environment, the regulator can motivate individuals to choose behaviour that is less biased, and hence realises risk levels closer to what individuals intended. We formally investigate the conditions under which such a Beneficial Safety Decrease—i.e. a deteriorating intervention that has a positive welfare effect—exists. Finally, we discuss three applications of our model.     

Does product complexity matter for competition in experimental retail markets?

We describe a first experiment on whether product complexity affects competition and consumers in retail markets. We are unable to detect a significant effect of product complexity on prices, except insofar as the demand elasticity for complex products is higher. However, there is qualified evidence that complex products have the potential to induce consumers to buy more than they would otherwise. In this sense, consumer exploitability in quantities cannot be ruled out. We also find evidence for shaping effects: consumers’ preferences are shaped by past experience with prices, and firms may in principle exploit this to sell more.     

Digit ratios (2D:4D) as predictors of risky decision making for both sexes

Many important decisions involve financial risk, and substantial evidence suggests that women tend to be more risk averse than men. We explore a potential biological basis of risk-taking variation within and between the sexes by studying how the ratio between the length of the second and fourth fingers (2D:4D) predicts risk-taking. A smaller 2D:4D ratio has been linked to higher exposure to prenatal testosterone relative to estradiol, with men having lower ratios than women. In financially motivated decision-making tasks, we find that men and women with smaller 2D:4D ratios chose significantly riskier options. We further find that the ratio partially explains the variation in risk-taking between the sexes. Moreover, for men and women at the extremes of the digit-ratio distribution the difference in risk-taking disappears. Thus, the 2D:4D ratio partially explains variation in financial risk-taking behavior within and between sexes and offers evidence of a biological basis for risk-taking behavior.     

A Diamond-Stiglitz approach to the demand for self-protection

The existing research concerning the relationship between risk aversion and prudence and the demand for self-protection assumes that the loss variable follows a Bernoulli distribution, and that changes in the level of self-protection are mean preserving. The analysis here replaces these two very strong conditions with ones which are more general. When doing this, the method of analysis is also significantly modified. This modification includes representing a change in the level of self-protection using the procedure developed by Diamond and Stiglitz (Journal of Economic Theory 8:337-360, 1974) for representing a change in risk. This alternate representation allows the existing findings to be generalized considerably, and also simplifies the analysis.     

Two-sided intergenerational moral hazard,long-term care insurance,and nursing home use

Two-sided intergenerational moral hazard occurs (i) if the parent’s decision to purchase long-term care (LTC) coverage undermines the child’s incentive to exert effort because the insurance protects the bequest from the cost of nursing home care, and (ii) when the parent purchases less LTC coverage, relying on child’s effort to keep him out of the nursing home. However, a “net” moral hazard effect obtains only if the two players’ responses to exogenous shocks fail to neutralize each other, entailing a negative relationship between child’s effort and parental LTC coverage. We focus on outcomes out of equilibrium, interpreting them as a break in the relationship resulting in no informal care provided and hence high probability nursing home admission. Changes in the parent’s initial wealth, LTC subsidy received, and child’s expected inheritance are shown to induce “net” moral hazard, in contradistinction to changes in child’s opportunity cost and share in the bequest.     

German family policy at the crossroads: analysing the impact of parental leave reform through simulation

Comparative studies of welfare reforms encounter two problems. First, the counterfactual problem is that in the real world schemes and their reforms do not coexist simultaneously and are hard to compare. Second, the contextual problem derives from the absence of comparable measures for change. Microsimulation helps to overcome these problems. It compares policy options – actual reforms or reform plans – simultaneously and provides a comparable measure: the disposable income of model families. This article uses a type–case approach to investigate recent reforms of the German parental leave benefit. Simulation makes those reforms comparable over time and across countries. Results show that the profile of the German scheme is changing from 'general family' towards 'dual-earner' support. Furthermore, the recent reforms make the German scheme converge towards the Swedish leave scheme. The recent reforms introduce a new concept of fairness and a focus on gender equality to German family policies.     

“A rape was reported”: construction of crime in a university newspaper

Historically, the news media have engaged in high rates victim blaming in their reporting of sexual assaults. However, in recent years, gains in civil rights and renewed attention to Title IX may mean sexual assault victims are receiving less-biased news coverage. Using a content analysis, we examined the tone and message of all crime stories published in one United States university newspaper from academic year 2015–2016 (n = 99). Comparing attributions of responsibility made to both victims and offenders across several major crime categories (rape, murder, sexual assault, robbery, physical assault, sexual misconduct, and sexual abuse), and consistent with historical trends, we found higher levels of victim blaming in stories on rape and sexual assault than any other crime. We identify rhetorical devices commonly used to discredit the victim and/or absolve the perpetrator. Despite perceived gains achieved by Title IX, news coverage continues to buttress victim blaming culture.     

In search of rigor, relevance, and legitimacy: what drives the impact of publications?

In this study, we introduce the concept of legitimacy to the rigor-relevance debate and investigate empirically how rigor, relevance, and legitimacy are related to the process of knowledge dissemination within a research field. We argue that this analysis has been a missing piece in the debate on rigor and relevance when institutional logics about what constitutes both elements lead researchers to act according to what they perceive to be appropriate behavior in the research field. We draw on insights from the micro and macro levels of institutional theory to show how researchers aiming to bestow legitimacy on their own work conform to these “rules of the game”. Using meta-analytical techniques, we focus on the field of strategic entrepreneurship and analyze how rigor- and relevance-related characteristics of studies in this field are linked to their legitimacy and therefore to the impact they have in the research community.