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Contemporary information systems make widespread use of artificial intelligence (AI). While AI offers various benefits, it can also be subject to systematic errors, whereby people from certain groups (defined by gender, age, or other sensitive attributes) experience disparate outcomes. In many AI applications, disparate outcomes confront businesses and organizations with legal and reputational risks. To address these, technologies for so-called “AI fairness” have been developed, by which AI is adapted such that mathematical constraints for fairness are fulfilled. However, the financial costs of AI fairness are unclear. Therefore, the authors develop AI fairness for a real-world use case from e-commerce, where coupons are allocated according to clickstream sessions. In their setting, the authors find that AI fairness successfully manages to adhere to fairness requirements, while reducing the overall prediction performance only slightly. However, they find that AI fairness also results in an increase in financial cost. Thus, in this way the paper’s findings contribute to designing information systems on the basis of AI fairness.
Having a gatekeeper position in a collaborative network offers firms great potential to gain competitive advantages. However, it is not well understood what kind of collaborations are associated with such a position. Conceptually grounded in social network theory, this study draws on the resource-based view and the relational factors view to investigate which types of collaboration characterize firms that are in a gatekeeper position, which ultimately could improve firm performance in subsequent periods. The empirical analysis utilizes a unique longitudinal data set to examine dynamic network formation. We used a data crawling approach to reconstruct collaboration networks among the 500 largest companies in Germany over nine years and matched these networks with performance data. The results indicate that firms in gatekeeper positions often engage in medium-intensity collaborations and less likely weak-intensity collaborations. Strong-intensity collaborations are not related to the likelihood of being a gatekeeper. Our study further reveals that a firm's knowledge base is an important moderator and that this knowledge base can increase the benefits of having a gatekeeper position in terms of firm performance.
By computing a volatility index (CVX) from cryptocurrency option prices, we analyze this market’s expectation of future volatility. Our method addresses the challenging liquidity environment of this young asset class and allows us to extract stable market implied volatilities. Two alternative methods are considered to compute volatilities from granular intra-day cryptocurrency options data, which spans over the COVID-19 pandemic period. CVX data therefore capture ‘normal’ market dynamics as well as distress and recovery periods. The methods yield two cointegrated index series, where the corresponding error correction model can be used as an indicator for market implied tail-risk. Comparing our CVX to existing volatility benchmarks for traditional asset classes, such as VIX (equity) or GVX (gold), confirms that cryptocurrency volatility dynamics are often disconnected from traditional markets, yet, share common shocks.
This dissertation consists of four self-contained chapters in the overlapping fields of industrial organization and organizational economics on the topics pricing, careers and supervision. Each chapter is the result of an independent research project. The dissertation analyzes empirical research topics by exploring novel observational data sets. It sheds light on open questions in the economic profession by extending fundamental models on pricing in the first two chapters and by challenging conventional explanations and methods on careers and supervision in the last two chapters.
- Chapter 1:
The first chapter is based on joint work with Steffen Eibelshäuser. It models price competition among brick-and-mortar retailers with business hours. Specifically, we propose a dynamic model of intraday price competition featuring spatial differentiation and firm size heterogeneity. The model makes detailed predictions concerning equilibrium-pricing patterns. When spatial differentiation is high and consumers cannot easily switch between retailers, equilibrium prices are stable at oligopoly levels. When differentiation is low, equilibrium prices fluctuate in cycles. The shapes of the cycles depend on the level of differentiation and on retailers’ reaction times. When reaction times decrease, the number of price cycles increases. In a second step, we apply the model to the German retail gasoline market. Gasoline retailers have been using digital price tags for decades and fast-paced price competition with more than ten price changes per day is no exception. Our model has successfully predicted the emergence of an additional intraday subcycle in April 2017. Moreover, we were able to confirm several detailed predictions concerning the shape of equilibrium price paths and individual firm behavior. Finally, we calibrate the model using a generalized method of moments. The model fits the data remarkably well, with coefficients of determination ranging from 60% to 80%. We use the fitted model to evaluate a number of policy counterfactuals. Restricting price increases results in higher prices and decreased welfare, leading us to conclude that regulation of dynamic markets is highly complex and can easily backfire.
- Chapter 2:
The second chapter analyzes the price-matching policies of two gasoline retailers. Customers of these retailers that are able to provide evidence of competitors posting lower prices have the ability to claim price matches. As shown in the first chapter, the Edgeworth Cycle model rationalizes price fluctuations in the German gasoline retail market. To determine policy interactions in cycling markets, this chapter extends the classical Edgeworth Cycle model by price-matching. The model predicts that price-matching retailers post higher prices and initiate price increases. The price-consulted firm anticipates this strategy, posts lower prices, and provokes the implementing firm to restore the price more frequently. Consulted stations also anticipate earlier price restoration reactions from implementing stations and, thus, provoke restorations earlier. This effect dominates in welfare calculations, such that price matching has positive welfare implications.
The second part of the chapter tests the hypotheses with price data on the German gasoline retail market. The estimation exploits a discontinuity in the policy-affected retailers. Therefore, the analysis disentangles the competitive effects of implementing and price-consulted market participants in comparison to retailers that are not affected. As predicted, the posted average and minimum prices of one implementing retailer and its consulted competitors increase. For the other price-matching retailer, I find reduced prices that contradict the model. The last part of the chapter relates the empirics to static models and shows that the dynamic component provides previously undiscovered insights.
- Chapter 3:
The third chapter is based on joint work with Emmanuelle Auriol and Guido Friebel. It represents the subtopic of careers in this dissertation. Specifically, the chapter provides the first comprehensive data collection analysis of women’s careers in all European research institutions in the field of economics. Using a web-scraping algorithm that constantly accesses position information on institutions’ websites, we collect a novel data set on researchers in Europe. These details entail information on researchers’ gender obtained by the first name and a face recognition. Similar to survey data on U.S. institutions, we identify a leaky pipeline, as women are less likely to become professors than men are. The situation is very heterogeneous across Europe. The gap is substantially larger in Western and Southern Europe than in Central and Eastern Europe. Furthermore, we identify institutions with a higher research output and a better research-ranking having a systematically lower share of females in full professor positions as well as entry-level positions for Ph.D. graduates. Austria, Belgium, Italy, Portugal, and Spain are the drivers for this correlation. All these results are in line with the “leaky pipeline” hypothesis, in which, over the different stages of a career, the attrition of women is higher than the one of men. We show that the cohort hypothesis arguing that the lag effect between the time of Ph.D. completion and the time of promotion to a full professorship is unable to explain the current low number of females.
- Chapter 4:
The fourth and last chapter "What does Mystery Shopping do?" is based on joint work with Sidney Block, Guido Friebel, Matthias Heinz, and Nick Zubanov. It addresses an auditing practice with a yearly U.S.-turnover of 19.5 billion USD in 2016 (European Society for Opinion and Market Research, 2017: Global Market Research 2017). The term mystery represents the key aspect of the tool. During an anonymous visit, so-called mystery shoppers perform certain predefined tasks such as purchasing a product, asking questions, registering complaints, or behaving in a certain way. Following their visit, the shoppers provide detailed reports about their experiences to the evaluated firms. The chapter investigates whether the practice is suitable to determine employees’ pay. Contrary to the general understanding that firms are able to observe service quality and, in turn, can proxy for business success with mystery shopping, we do not observe mystery-shopping evaluations to correlate positively with firm performance. A decomposition of the evaluation reports indicates that mystery-shopping scores are biased and the shopper’s identity explains up to 20% of the score’s variance. Thus, the shopper’s identity has the largest impact out of all observable characteristics. With the results that mystery-shopping scores are noisy and biased, we conclude that they are not suitable for performance pay in the context of our study. In addition, we show that if the number of observations is sufficiently large, aggregated scores relate to business success. The required number of shops per evaluation period must be, however, larger by a factor between 3 and 30 per evaluated subject. Hence, cost advantages of mystery shopping diminish such that the cost benefits to customer assessments could vanish completely. The current methodology, however, may still be useful for other employee-related purposes like monitoring, which is in line with the policies of the considered firms.
The modern tontine : an innovative instrument for longevity risk management in an aging society
(2020)
We investigate whether a historical pension concept, the tontine, yields enough innovative potential to extend and improve the prevailing privately funded pension solutions in a modern way. The tontine basically generates an age-increasing cash flow, which can help to match the increasing financing needs at old ages. In contrast to traditional pension products, however, the tontine generates volatile cash flows, which means that the insurance character of the tontine cannot be guaranteed in every situation. By employing Multi Cumulative Prospect Theory (MCPT) we answer the question to what extent tontines can be a complement to or a substitute for traditional annuities. We find that it is only optimal to invest in tontines for a certain range of initial wealth. In addition, we investigate in how far the tontine size, the volatility of individual liquidity needs and expected mortality rates contribute to the demand for tontines.
Auszubildende sollen durch die Berufsausbildung u.a. die Kompetenz erlangen, berufliche Probleme zu lösen. Abschlussprüfungen dienen der Kompetenzerfassung, schriftlich-kaufmännische Prüfungsaufgaben bilden allerdings noch unzureichend Problemsituationen ab, deren Lösung Problemlösekompetenz erfordert. An der Erstellung von Prüfungsaufgaben sind auch Lehrkräfte kaufmännisch-beruflicher Schulen beteiligt. In der Arbeit wird untersucht, wie sie in der ersten und zweiten Phase der Lehrer*innenbildung auf das Erstellen problemhaltiger Aufgaben zu summativ-diagnostischen Zwecken vorbereitet werden. Hierfür werden Dokumentenanalysen zu beiden Phasen der Lehrer*innenbildung durchgeführt. Die Ergebnisse werden mittels einer Fragebogenstudie mit Studiengangsleiter*innen sowie Interviews mit Fachleiter*innen der Studienseminare gesichert. Um die Wahrnehmung angehender Lehrkräfte zu erfahren, werden Interviews mit Masterstudierenden der Wirtschaftspädagogik sowie Lehrkräfte im Vorbereitungsdienst (LiV) an kaufmännisch-beruflichen Schulen durchgeführt.
Durch die Vorstudien gelingt es, Optimierungsbedarfe in der Ausbildung von Lehrkräften kaufmännisch-beruflicher Schulen festzuhalten. Davon ausgehend wird ein Trainingskonzept begründet ausgewählt. Die Evaluation dessen erfolgt mittels einer quasi-experimentellen Studie mit Masterstudierende und LiV. Zur qualitativen Evaluation werden Interviews mit Teilnehmenden der Interventionsgruppe durchgeführt. Die Ergebnisse zeigen, dass die Teilnehmenden das Training als Intervention überwiegend positiv wahrnehmen und dieser, zumindest mit Blick auf das Erstellen von problemhaltigen Aufgaben, zu einem Lernzuwachs führt. Durch die bedarfsorientierte Intervention und dessen Evaluationsergebnisse wird ein Konzept vorgeschlagen, welches eine Lösung zur Deckung bestehender Optimierungsbedarfe bietet. Die Ergebnisse der Arbeit haben das Potential, langfristig einen Beitrag zur Verbesserung der Lehrer*innenbildung zu leisten und somit u.a. Assessmentaufgaben valider zu gestalten.
The Judgement of the EGC in the Case T-122/15 – Landeskreditbank Baden-Württemberg - Förderbank v European Central Bank is the first statement of the European judiciary on the sub-stantive law of the Banking Union. Beyond its specific holding, the decision is of great importance, because it hints at the methodological approach the EGC will take in interpreting prudential banking regulation in the appeals against supervisory measures that fall in its jurisdiction under TFEU, arts. 256(1) subpara 1 and 263(4). Specifically, the case pertained to the scope of direct ECB oversight of significant banks in the euro area and the reassignment of this competence to national competent authorities (NCAs) in individual circumstances (Single Supervisory Mechanism (SSM) Regulation, art. 6(4) subpara 2; SSM Framework Regulation, arts. 70, 71).
Small businesses face major challenges to becoming more innovative. These challenges are particularly prevalent in emerging economies where high uncertainties are a barrier to innovation. We know from previous studies that linkages to universities, on the one hand, and public procurement, on the other, support large and innovative firms in their efforts to become more innovative. However, we do not know whether these positive effects also hold true for small businesses. In this paper, we focus on how policy strategies reducing information, market and financial uncertainties shape small businesses’ innovation in China. Based on a sample of 926 small businesses derived from the World Bank Enterprises Survey in China (2012), we find that university-industry linkages enhance innovation, though only when it comes to minor forms of innovation. In line with the resource-based view of the firm, this effect is stronger for small businesses with higher capabilities. Moreover, we show that bidding for or delivering contracts to public sector clients has a positive effect on innovation, and in particular of major forms of innovation. In the bidding selection process, private firms and firms with higher capabilities are selected. Our findings show that both policy strategies have enhanced innovation, though with different effects on the degree of novelty. We attribute this finding to the different degrees of uncertainties they address.
Public kindergarten, maternal labor supply, and earnings in the longer run: too little too late?
(2021)
By facilitating early re-entry to the labor market after childbirth, public kindergarten might positively affect maternal human capital and labor market outcomes: Are such effects long-lasting? Can we rely on between-individuals differences in quarter of birth to identify them? I isolate the effects of interest from spurious associations through difference-in-difference, exploiting across-states and over-time variation in public kindergarten eligibility regulations in the United States. The estimates suggest a very limited impact in the first year, and no longer-run impacts. Even in states where it does not affect kindergarten eligibility, quarter of birth is strongly and significantly correlated with maternal outcomes.
The quality of life: protecting non-personal interests and non-personal data in the age of big data
(2021)
Under the current legal paradigm, the rights to privacy and data protection provide natural persons with subjective rights to protect their private interests, such as related to human dignity, individual autonomy and personal freedom. In principle, when data processing is based on non-personal or aggregated data or when such data pro- cesses have an impact on societal, rather than individual interests, citizens cannot rely on these rights. Although this legal paradigm has worked well for decades, it is increasingly put under pressure because Big Data processes are typically based indis- criminate rather than targeted data collection, because the high volumes of data are processed on an aggregated rather than a personal level and because the policies and decisions based on the statistical correlations found through algorithmic analytics are mostly addressed at large groups or society as a whole rather than specific individuals. This means that large parts of the data-driven environment are currently left unregu- lated and that individuals are often unable to rely on their fundamental rights when addressing the more systemic effects of Big Data processes. This article will discuss how this tension might be relieved by turning to the notion ‘quality of life’, which has the potential of becoming the new standard for the European Court of Human Rights (ECtHR) when dealing with privacy related cases.
Most event studies rely on cumulative abnormal returns, measured as percentage changes in stock prices, as their dependent variable. Stock price reflects the value of the operating business plus non-operating assets minus debt. Yet, many events, in particular in marketing, only influence the value of the operating business, but not non-operating assets and debt. For these cases, the authors argue that the cumulative abnormal return on the operating business, defined as the ratio between the cumulative abnormal return on stock price and the firm-specific leverage effect, is a more appropriate dependent variable. Ignoring the differences in firm-specific leverage effects inflates the impact of observations pertaining to firms with large debt and deflates those pertaining to firms with large non-operating assets. Observations of firms with high debt receive several times the weight attributed to firms with low debt. A simulation study and the reanalysis of three previously published marketing event studies shows that ignoring the firm-specific leverage effects influences an event study's results in unpredictable ways.
The current economic landscape is complex and globalized, and it imposes on individuals the responsibility for their own financial security. This situation has been intensified by the COVID-19 crisis, since short-time work and layoffs significantly limit the availability of financial resources for individuals. Due to the long duration of the lockdown, these challenges will have a long-term impact and affect the financial well-being of many citizens. Moreover, it can be assumed that the consequences of this crisis will once again particularly affect groups of people who have already frequently been identified as having low financial literacy. Financial literacy is therefore an important target for educational measures and interventions. However, it cannot be considered in isolation but must take into account the many potential factors that influence financial literacy alone or in combination. These include personality traits and socio-demographic factors as well as the (in)ability to defer gratification. Against this background, individualized support offers can be made. With this in mind, in the first step of this study, we analyze the complex interaction of personality traits, socio-demographic factors, the (in-)ability to delay gratification, and financial literacy. In the second step, we differentiate the identified effects regarding different groups to identify moderating effects, which, in turn, allow conclusions to be drawn about the need for individualized interventions. The results show that gender and educational background moderate the effects occurring between self-reported financial literacy, financial learning opportunities, delay of gratification, and financial literacy.
Solving High-Dimensional Dynamic Portfolio Choice Models with Hierarchical B-Splines on Sparse Grids
(2021)
Discrete time dynamic programming to solve dynamic portfolio choice models has three immanent issues: firstly, the curse of dimensionality prohibits more than a handful of continuous states. Secondly, in higher dimensions, even regular sparse grid discretizations need too many grid points for sufficiently accurate approximations of the value function. Thirdly, the models usually require continuous control variables, and hence gradient-based optimization with smooth approximations of the value function is necessary to obtain accurate solutions to the optimization problem. For the first time, we enable accurate and fast numerical solutions with gradient-based optimization while still allowing for spatial adaptivity using hierarchical B-splines on sparse grids. When compared to the standard linear bases on sparse grids or finite difference approximations of the gradient, our approach saves an order of magnitude in total computational complexity for a representative dynamic portfolio choice model with varying state space dimensionality, stochastic sample space, and choice variables.
Correction to: Computational Economics https://doi.org/10.1007/s10614-020-10061-x
The original publication has been updated. In the original publication of this article, under the Introduction heading section, the corrections to the second paragraph’s inline equation were not incorporated. The author’s additional corrections have also been incorporated. The publisher apologizes for the error made during production.
Intelligenz ist einer der stärksten Einzelprädikatoren für berufliche Leistungen. Hochintelligente Personen, sogenannte Hochbegabte, müssten daher generell hohe berufliche Leistungen erbringen. Dies steht jedoch im Widerspruch zu Darstellungen von Schwierigkeiten Hochbegabter im Beruf. Sollten die negativen Stereotype zutreffen, wäre dies aus ressourcenorientierter Sicht problematisch, da Organisationen das der Hochbegabung zugrunde liegende Potenzial der Mitarbeiter*innen nicht hinreichend nutzen. Die vorliegende Arbeit leistet einen Beitrag dazu, diese Diskrepanz aufzuklären, indem sie untersucht wie Hochbegabte ihre berufliche Situation (erfolgreich) gestalten. Nach einer Begriffsklärung und Darstellung des Zusammenhangs von Intelligenz und Beruf wird im ersten Beitrag der internationale Forschungsstand mithilfe eines Literature Reviews systematisiert. Aufbauend darauf werden im zweiten Beitrag mithilfe einer Fragebogenerhebung die überwiegend internationalen Beiträge durch eine deutsche Stichprobe und die bisher wenig betrachtete Gruppe von Hochbegabten gemäß Kompetenzdefinition ergänzt. Schließlich fokussiert der dritte Beitrag den Widerspruch, dass Hochbegabte generell erfolgreich und zufrieden im Beruf sind, jedoch individuell von Schwierigkeiten berichten. Dazu werden teilstrukturierte Interviews durchgeführt, um ein tieferes Verständnis für den Einfluss der Hochbegabung auf den Beruf sowie etwaige bestehende Unterschiede zu nicht-hochbegabten Personen zu gewinnen. Zudem werden Strategien erfasst, die Hochbegabte nutzen, um Unterschiede und eventuell daraus resultierende Schwierigkeiten zu bewältigen. Abschließend werden Implikationen für die Berufspraxis und Forschung diskutiert.
A person's intelligence level positively influences his or her professional success. Gifted and highly intelligent individuals should therefore be successful in their careers. However, previous findings on the occupational situation of gifted adults are mainly known from popular scientific sources in the fields of coaching and self-help groups and confirm prevailing stereotypes that gifted people have difficulties at work. Reliable studies are scarce. This systematic literature review examines 40 studies with a total of 22 job-related variables. Results are shown in general for (a) the employment situation and more specific for the occupational aspects (b) career, (c) personality and behavior, (d) satisfaction, (e) organization, and (f) influence of giftedness on the profession. Moreover, possible differences between female and male gifted individuals and gifted and non-gifted individuals are analyzed. Based on these findings, implications for practice as well as further research are discussed.
Die Dissertation besteht aus drei thematisch zusammenhängenden Forschungspapieren, in denen zeitstetige Konsum-, Investment- und Versicherungsprobleme über den Lebenszyklus betrachtet werden. Ein besonderer Fokus liegt auf realistischen Features wie stochastischem Sterberisiko und nicht-replizierbarem Einkommen. In der ersten Forschungsarbeit untersuche ich die Relevanz von stochastischem Sterberisiko. Dabei zeige ich, dass eine Sprungkomponente in der Sterberate die optimalen Entscheidungen der Agenten und das Wohlfahrtslevel signifikant beeinflusst. Eine Diffusionskomponente ist hingegen vernachlässigbar. In dem zweiten Forschungspapier untersuchen wir die Risikolebensversicherungsnachfrage einer Familie, dessen Alleinverdiener stochastischem Sterberisiko ausgesetzt ist. Wir achten insbesondere auf eine realistische Modellierung der Versicherung. Wir zeigen, dass dadurch junge Agenten dem Versicherungsmarkt fern bleiben und die Versicherungsnachfrage mit dem Alter steigt, im Gegensatz zu Modellen mit einfachen stetig-veränderbaren Versicherungen. Weiterhin verstärken langlaufende Versicherungsverträge die negativen Effekte von Einkommensschocks und werden daher von risikoaversen Agenten weniger abgeschlossen. In der dritten Forschungsarbeit untersuche ich die Critical Illness Versicherungsnachfrage eines Agenten in einem Modell mit stochastischem Sterberisiko und Gesundheitsausgaben. Die Versicherung übernimmt dabei die zusätzlichen Gesundheitskosten, die bei einem Sprung entstehen. Fast alle Agenten schließen solch eine Versicherung vor dem Rentenalter ab, selbst wenn diese sehr kostspielig ist. Insbesondere Agenten mit geringen Gesundheitsausgaben und hohem Einkommen haben eine hohe Versicherungsnachfrage.