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With free delivery of products virtually being a standard in E-commerce, product returns pose a major challenge for online retailers and society. For retailers, product returns involve significant transportation, labor, disposal, and administrative costs. From a societal perspective, product returns contribute to greenhouse gas emissions and packaging disposal and are often a waste of natural resources. Therefore, reducing product returns has become a key challenge. This paper develops and validates a novel smart green nudging approach to tackle the problem of product returns during customers’ online shopping processes. We combine a green nudge with a novel data enrichment strategy and a modern causal machine learning method. We first run a large-scale randomized field experiment in the online shop of a German fashion retailer to test the efficacy of a novel green nudge. Subsequently, we fuse the data from about 50,000 customers with publicly-available aggregate data to create what we call enriched digital footprints and train a causal machine learning system capable of optimizing the administration of the green nudge. We report two main findings: First, our field study shows that the large-scale deployment of a simple, low-cost green nudge can significantly reduce product returns while increasing retailer profits. Second, we show how a causal machine learning system trained on the enriched digital footprint can amplify the effectiveness of the green nudge by “smartly” administering it only to certain types of customers. Overall, this paper demonstrates how combining a low-cost marketing instrument, a privacy-preserving data enrichment strategy, and a causal machine learning method can create a win-win situation from both an environmental and economic perspective by simultaneously reducing product returns and increasing retailers’ profits.
Linear rational-expectations models (LREMs) are conventionally "forwardly" estimated as follows. Structural coefficients are restricted by economic restrictions in terms of deep parameters. For given deep parameters, structural equations are solved for "rational-expectations solution" (RES) equations that determine endogenous variables. For given vector autoregressive (VAR) equations that determine exogenous variables, RES equations reduce to reduced-form VAR equations for endogenous variables with exogenous variables (VARX). The combined endogenous-VARX and exogenous-VAR equations comprise the reduced-form overall VAR (OVAR) equations of all variables in a LREM. The sequence of specified, solved, and combined equations defines a mapping from deep parameters to OVAR coefficients that is used to forwardly estimate a LREM in terms of deep parameters. Forwardly-estimated deep parameters determine forwardly-estimated RES equations that Lucas (1976) advocated for making policy predictions in his critique of policy predictions made with reduced-form equations.
Sims (1980) called economic identifying restrictions on deep parameters of forwardly-estimated LREMs "incredible", because he considered in-sample fits of forwardly-estimated OVAR equations inadequate and out-of-sample policy predictions of forwardly-estimated RES equations inaccurate. Sims (1980, 1986) instead advocated directly estimating OVAR equations restricted by statistical shrinkage restrictions and directly using the directly-estimated OVAR equations to make policy predictions. However, if assumed or predicted out-of-sample policy variables in directly-made policy predictions differ significantly from in-sample values, then, the out-of-sample policy predictions won't satisfy Lucas's critique.
If directly-estimated OVAR equations are reduced-form equations of underlying RES and LREM-structural equations, then, identification 2 derived in the paper can linearly "inversely" estimate the underlying RES equations from the directly-estimated OVAR equations and the inversely-estimated RES equations can be used to make policy predictions that satisfy Lucas's critique. If Sims considered directly-estimated OVAR equations to fit in-sample data adequately (credibly) and their inversely-estimated RES equations to make accurate (credible) out-of-sample policy predictions, then, he should consider the inversely-estimated RES equations to be credible. Thus, inversely-estimated RES equations by identification 2 can reconcile Lucas's advocacy for making policy predictions with RES equations and Sims's advocacy for directly estimating OVAR equations.
The paper also derives identification 1 of structural coefficients from RES coefficients that contributes mainly by showing that directly estimated reduced-form OVAR equations can have underlying LREM-structural equations.
Ad blockers allow users to browse websites without viewing ads. Online news publishers that rely on advertising income tend to perceive users’ adoption of ad blockers purely as a threat to revenue. Yet, this perception ignores the possibility that avoiding ads—which users presumably dislike—may affect users’ online news consumption behavior in positive ways. Using 3.1 million visits from 79,856 registered users on a news website, this research finds that ad blocker adoption has robust positive effects on the quantity and variety of articles users consume. Specifically, ad blocker adoption increases the number of articles that users read by 21.0%–43.2%, and it increases the number of content categories that users consume by 13.4%–29.1%. These effects are stronger for less-experienced users of the website. The increase in news consumption stems from increases in repeat visits to the news website, rather than in the number of page impressions per visit. These postadoption visits tend to start from direct navigation to the news website, rather than from referral sources. The authors discuss how news publishers could benefit from these findings, including exploring revenue models that consider users’ desire to avoid ads.
Large companies are increasingly on trial. Over the last decade, many of the world’s biggest firms have been embroiled in legal disputes over corruption charges, financial fraud, environmental damage, taxation issues or sanction violations, ending in convictions or settlements of record-breaking fines, well above the billion-dollar mark. For critics of globalization, this turn towards corporate accountability is a welcome sea-change showing that multinational companies are no longer above the law. For legal experts, the trend is noteworthy because of the extraterritorial dimensions of law enforcement, as companies are increasingly held accountable for activities independent of their nationality or the place of the activities. Indeed, the global trend required understanding the evolution of corporate criminal law enforcement in the United States in particular, where authorities have skillfully expanded its effective jurisdiction beyond its territory. This paper traces the evolution of corporate prosecutions in the United States. Analyzing federal prosecution data, it then shows that foreign firms are more likely to pay a fine, which is on average 6,6 times larger.
Employing the art-collection records of Burton and Emily Hall Tremaine, we consider whether early-stage art investors can be understood as venture capitalists. Because the Tremaines bought artists’ work very close to an artwork’s creation, with 69% of works in our study purchased within one year of the year when they were made, their collecting practice can best be framed as venture-capital investment in art. The Tremaines also illustrate art collecting as social-impact investment, owing to their combined strategy of art sales and museum donations for which the collectors received a tax credit under US rules. Because the Tremaines’ museum donations took place at a time that U.S. marginal tax rates from 70% to 91%, the near “donation parity” with markets, creating a parallel to ESG investment in the management of multiple forms of value.
Central banks have faced a succession of crises over the past years as well as a number of structural factors such as a transition to a greener economy, demographic developments, digitalisation and possibly increased onshoring. These suggest that the future inflation environment will be different from the one we know. Thus uncertainty about important macroeconomic variables and, in particular, inflation dynamics will likely remain high.
This policy letter collects elementary economic statistics and provides a very basic look on Russian public finances (i) to inform the reader’s opinion on a possible planning process behind the war against Ukraine and (ii) to discuss prospects of an energy embargo and its capability to affect the stability of the Russian economy.
This note argues that in a situation of an inelastic natural gas supply a restrictive monetary policy in the euro zone could reduce the energy bill and therefore has additional merits. A more hawkish monetary policy may be able to indirectly use monopsony power on the gas market. The welfare benefits of such a policy are diluted to the extent that some of the supply (approximately 10 percent) comes from within the euro zone, which may give rise to distributional concerns.
We investigate whether the bank crisis management framework of the European banking union can effectively bar the detrimental influence of national interests in cross-border bank failures. We find that both the internal governance structure and decision making procedure of the Single Resolution Board (SRB) and the interplay between the SRB and national resolution authorities in the implementation of supranationally devised resolution schemes provide inroads that allow opposing national interests to obstruct supranational resolution. We also show that the Single Resolution Fund (SRG), even after the ratification of the reform of the European Stability Mechanism (ESM) and the introduction of the SRF backstop facility, is inapt to overcome these frictions. We propose a full supranationalization of resolution decision making. This would allow European authorities in charge of bank crisis management to operate autonomously and achieve socially optimal outcomes beyond national borders.
Spillovers of PE investments
(2022)
In this paper, we investigate a primary potential impact of leveraged buyout (LBOs) transactions: the effects of LBOs on the peers of the LBO target in the same industry. Using a data sample based on US LBO transactions between 1985 and 2016, we investigate the impact of the peer firms in the aftermath of the transaction, relative to non-peer firms. To account for potential endogeneity concerns, we employ a network-based instrumental variable approach. Based on this analysis, we find support for the proposition that LBOs do indeed matter for peer firms’ performance and corporate strategy relative to non-peer firms. Our study supports a learning factor hypothesis: peers gain by learning from the LBO target to improve their operational performance. Conversely, we find no evidence to support the conjecture that peers lose due to the increased competitiveness of the LBO target firm.
Enabling cybersecurity and protecting personal data are crucial challenges in the development and provision of digital service chains. Data and information are the key ingredients in the creation process of new digital services and products. While legal and technical problems are frequently discussed in academia, ethical issues of digital service chains and the commercialization of data are seldom investigated. Thus, based on outcomes of the Horizon2020 PANELFIT project, this work discusses current ethical issues related to cybersecurity. Utilizing expert workshops and encounters as well as a scientific literature review, ethical issues are mapped on individual steps of digital service chains. Not surprisingly, the results demonstrate that ethical challenges cannot be resolved in a general way, but need to be discussed individually and with respect to the ethical principles that are violated in the specific step of the service chain. Nevertheless, our results support practitioners by providing and discussing a list of ethical challenges to enable legally compliant as well as ethically acceptable solutions in the future.
In the communication of the European Central Bank (ECB), the statement that „we act within our mandate“ is often referred to. Also among practitioners of the Eurosystem the term „mandate“ has become popular. In his Working Paper, Helmut Siekmann analyzes the legal foundation of the tasks and objectives of the Eurosysstem and price stability as a legal term. He finds that the primary law of the EU only very sparsely employs the term „mandate“. It is never used in the context of monetary policy and its institutions. Moreover, he comes to the conclusion that inflation targeting as a task, competence, or objective of the Eurosystem is legally highly questionable according to the common standards of interpretation.
Gegen den Landeshaushalt 2022 des Freistaats Thüringen bestehen nach Einschätzung von Helmut Siekmann erhebliche verfassungsrechtliche Bedenken. In einem Gutachten kommt Siekmann zu dem Schluss, dass sich die festgestellten globalen Minderausgaben im Vergleich zum gesamten Haushaltsvolumen nicht rechtfertigen lassen. Der verfassungsrechtlich gebotene Haushaltsausgleich sei nur dadurch erzielt worden, dass die eigentlich gebotenen Einzelkürzungen nicht vom Parlament entschieden, sondern der Exekutive überlassen worden seien. Durch Globale Minderausgaben soll der Ausgleich von Einnahmen und Ausgaben erreicht werden, ohne dafür erforderliche und politisch oft schwer durchsetzbare Kürzungen bei Einzeltiteln vornehmen zu müssen.
In Thüringen fehlen der Minderheitskoalition aus Linke, SPD und Grünen im Parlament vier Stimmen für eine eigene Mehrheit. Sie muss damit bei allen Entscheidungen eine Unterstützung der oppositionellen CDU aushandeln. Siekmann weist in seinem Gutachten darauf hin, dass die Veranschlagung von globalen Minderausgaben gleich welcher Art in keinem Fall die Exekutive ermächtigt, bestehende Verpflichtungen nicht zu erfüllen.
Socially responsible investing (SRI) continues to gain momentum in the financial market space for various reasons, starting with the looming effect of climate change and the drive toward a net-zero economy. Existing SRI approaches have included environmental, social, and governance (ESG) criteria as a further dimension to portfolio selection, but these approaches focus on classical investors and do not account for specific aspects of insurance companies. In this paper, we consider the stock selection problem of life insurance companies. In addition to stock risk, our model set-up includes other important market risk categories of insurers, namely interest rate risk and credit risk. In line with common standards in insurance solvency regulation, such as Solvency II, we measure risk using the solvency ratio, i.e. the ratio of the insurer’s market-based equity capital to the Value-at-Risk of all modeled risk categories. As a consequence, we employ a modification of Markowitz’s Portfolio Selection Theory by choosing the “solvency ratio” as a downside risk measure to obtain a feasible set of optimal portfolios in a three-dimensional (risk, return, and ESG) capital allocation plane. We find that for a given solvency ratio, stock portfolios with a moderate ESG level can lead to a higher expected return than those with a low ESG level. A highly ambitious ESG level, however, reduces the expected return. Because of the specific nature of a life insurer’s business model, the impact of the ESG level on the expected return of life insurers can substantially differ from the corresponding impact for classical investors.
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.