CHAIR OF

ECONOMIC POLICY

Initiative on Philanthropy and Decision Making

Weimann J.*, Sass, M.*

Duration: 2014 - 2015

* Otto-v.-Guericke-Universität Magdeburg

Funding: Univeristy of Chicago

The dynamics of individual preferences in strategic and non-strategic games

Weimann, J.*, Sass, M.*, Timme, F.*

Duration: 2012 - 2015

The dominant behavioral theory in economics presupposes that people have complete preference orders that can be represented by utility functions. Under this assumption, decisions can be described as benefit maximization calculations. The basis for this is the theory of revealed preferences, which ensures that the rational model can be applied under very general conditions. The theory of revealed preferences says nothing about whether preference orders are constant over time or can change through election decisions. However, the application of the rational model to the analysis of individual decisions in economics implicitly presupposes that preferences remain constant over time. Only under this assumption can equilibria be compared and the method of comparative statics be applied. Whether preferences are actually constant is ultimately an empirical question, but one that is difficult to answer with field data. This is why experimental methods are appropriate. To date, there are only a few findings that can be traced back to the applicant's preliminary work. These show that social preferences in particular are not stable, but show a clear dynamic: Even without learning effects and without the possibility of acquiring a reputation, the influence of social preferences is considerably reduced in repeated dictator experiments. The project will examine whether this finding also applies to strategic games. For this purpose, an experimental design will be used that excludes learning and reputation effects. First results of a pilot experiment have shown that the preferences of the players in public goods experiments are subject to a similar dynamic as in dictator experiments. The design will be used in other strategic and non-strategic games and the question of how preferences change in the long run will be clarified. The basic hypothesis is that preferences change through adaptation processes, but lose their importance during long pauses between decisions, so that (social) preferences can regenerate in the long run. In addition, the project will deal with the question of which adaptation processes drive behavioral dynamics.

* Otto-von-Guericke-Universität Magdeburg

Funding: DFG

Public-good experiments with large groups in a large virtual laboratory

Weimann J.*, Brosig J.**, Hennig-Schmidt H.***, Keser, C.****, Stahr Ch.*

Duration: 2010 - 2013


Experiments on the private provision of public goods have long been the subject of experimental economic research. The reason for this strong interest is the fact that many real allocation problems can be characterized as public goods problems. An important example is the current environmental debate, in which public goods such as the climate system play a central role. In the experimental investigation of such goods, however, a central methodological problem arises: Controlled laboratory experiments are necessarily experiments in small groups of 4 to 10 players. However, real public goods problems affect very large groups. If the disbursement function used to implement public goods in the laboratory is applied to such large groups, it can be seen that in large groups there is a close relationship between the N-person-prisoner dilemma and the dictator game. This is lost in the usual small group experiments. It is therefore only possible to a limited extent to make statements on the basis of these experiments about the behaviour in real public-good problems. The literature on the dictator game makes it clear that the behaviour of dictators depends very much on the special institutional conditions set by experimental design. For this reason, experiments are proposed in which several laboratories are linked together in an Internet-based virtual laboratory in which laboratory experiments with large groups are possible. In this way, a payout situation is to be created that corresponds to the real public-good problems and allows to study the behavior in the resulting quasi dictator game.

* Otto von Guericke University Magdeburg
** University of Duisburg-Essen
*** Rheinische Friedrich-Wilhelms-University Bonn
**** Georg-August-Universität Göttingen

Funding: DFG

Promotion of the use of new technologies in science and for the creation of information and knowledge management systems - Integrated Research Platform

Weimann, J.*, Wypior, H.*

Duration: 2009 - 2013

The research landscape of economics has undergone significant changes in recent years due to the rapid development of electronic data processing and networking. This development requires an adaptation of the technological processes in the field of information and knowledge management.

However, the expansion of the use of economic experiments, especially through experimental business administration, which is becoming more and more important, is accompanied by capacity and security problems which can no longer be solved by the existing systems of the MaXLab (Magdeburger Labor für experimentelle Wirtschaftsforschung der Fakultät für Wirtschaftswissenschaft der Otto-von-Guericke-Universität). For these reasons, an expansion of experimental research can only be achieved with a fundamental system adaptation.

The proposed project serves to solve the two above-mentioned tasks within the framework of the research focus of the Faculty of Economic Sciences. The research focus "Decision Design" offers a structure that gives the existing excellent and internationally visible research achievements within the faculty a clear overall profile. In addition, it prepares the ground for the development of new, innovative projects and the sustainable improvement of the Faculty's third-party funding capability.

In order to make the research focus and the experimental laboratory even more efficient and competitive, the use of new technologies is necessary. The faculty is therefore applying for financial support to set up an integrated research database. This should:

- enable friction-free exchange with the internal and external public

- have an integrated experimental server

- have an integrated research server

The aim is to enable joint research by scientists from various faculties of the Otto-von-Guericke University and research with various scientific institutes in Saxony-Anhalt, the conduct of extensive experiments via the Internet in the greater Saxony-Anhalt area and internal faculty empirical work in compliance with high data protection regulations.

 

* Otto v. Guericke University Magdeburg

Dynamics of altruistic behaviour in dictator games

Duration: 2009 - 2012

Recent studies in experimental economic research show that the behaviour of test subjects in dictator games is drastically standardized if they are repeatedly allowed to play at intervals of several weeks. The aim of the project is to investigate these dynamics neurologically with the aid of imaging techniques in order to obtain more detailed information about the causes of the dynamics.

Financing: CBBS

Cooperation partners: Dr. Marcus Heldmann, Neurological University Hospital and PD Dr. Michael Brosch, Leibnitz Institute of Neurobiology

BMF-project: “Life satisfaction studies: New paradigms for the fiscal policy”

The project consists of two parts. The first one includes an overview and an evaluation of the literature about the question, whether the modern life satisfaction research is relevant for the German fiscal policy. The second part is about own estimates based on the foundation of the SOEP, which are supposed to answer the question, whether there is a correlation between life satisfaction and fiscal numbers – e.g. national debt.

Duration: The project is expected to be conducted until 10/2009

Cooperation partners: The project takes place in close collaboration with Prof. Dr. Ronnie Schöb and Prof. Dr. Andreas Knabe, both at the Freie Universität Berlin.

BMF-project: “Perceived tax burden“

The project focuses on the measurement of the perceived tax and fee burden. The part of the project includes an overview of the existing literature and is supposed to answer the question, whether there is evidence for a distorted perception of taxes. In the second part the effect of the complexity of the tax and fee law on the perceived burden is analyzed. Furthermore it is studied how taxpayers evaluate the service in return for the social security contributions and under which conditions also taxes are associated with rewards. Both questions will be answered by conjoint-analyses. In the third part laboratory experiments give information if a “tax illusion” can be shown at individual decisions. It analyzes how taxes on the earned income influence the decision of offering labour.

Duration: The project is expected to be conducted until 10/2009

Cooperation partners: The project takes place in close collaboration with Prof. Dr. Jochen Hundsdoerfer Freie Universität Berlin, Prof. Dr. Kay Blaufus Europa-Universität Frankfurt (Oder), Prof. Dr. Dirk Kiesewetter Universität Würzburg.

Fairness preferences and international environmental agreements

Duration: 2006 - 2009

Experimental research on the role of fairness preferences in the provision of public goods.

Funding: DFG

Cooperation partner: The project is carried out in close cooperation with the ZEW Mannheim. Project manager is Prof. Dr. Bodo Sturm (formerly ZEW). Further cooperation with Prof. Dr. Riechmann, University of Kaiserslautern

Experimental investigation of individual preferences for communication

Brosig, J.*

Duration: 2004

The subject of the project is the experimental analysis of the effect of different forms of electronic communication on individual decision-making behaviour. In particular, the question of whether and how players use these forms of communication strategically in order to achieve certain game results is to be clarified. The investigation includes negotiation games that are characterized by the fact that individually rational behavior does not lead to collectively rational behavior (= efficiency). The aim of the project is to specify individual preferences with regard to different forms of communication and thus to create a basis for the development of a - so far missing - theory with which the effect of communication on individual decision-making behaviour can be mapped.

* Otto von Guericke University Magdeburg

Funding: DFG

Focus: Research Fellowship

Experimental investigation of laboratory markets for internationally tradable emission rights as application of the testbedding method

Dipl. Vw. Bodo Storm*

Duration: 2003 - 2004

The project has two objectives. First, against the background of a critical discussion of the testbedding method in the Magdeburg Experimental Laboratory (MaxLab), a computer-aided laboratory market for emission rights is to be created that is capable of reproducing stylised facts from previous emission rights experiments and investigating selected framing aspects. The second goal of the project is to create two internet-based markets based on the laboratory experiments in the MaxLab, each of which will reflect as accurately as possible the conditions to be expected for future emissions trading at state level within the framework of the Kyoto Protocol and the planned EU emissions trading system at company level. The high external validity of the Internet markets is intended to enable reliable conclusions to be drawn about the behaviour of the market players to be expected in reality.
Knowledge of the functioning of these Internet markets for emission rights could not only contribute to finding an optimal design, it would also allow potential players in such a market to familiarise themselves with the specific market mechanics.

* Otto von Guericke University of Magdeburg

Funding: DFG

Economic Effects of Research Funding in Saxony-Anhalt

Dipl. Vw. Ulf Rosner*

Duration: 2001 - 2004

The state of Saxony-Anhalt is making great efforts to promote scientific research and academic teaching. But what returns does this investment bring to the state? This question is investigated by the project in cooperation with the Halle Institute for Economic Research and the Harz University of Applied Sciences. Essentially, a distinction is made between two types of effects triggered by universities and colleges. First, these institutions generate an influx of resources into the country simply by producing research and teaching, which would not be possible without these institutions. The main sources of these inflows are student income and third-party funding. A first goal of the project is to estimate these direct effects and to compare them with the costs of the universities. Indirect effects also result from the fact that the universities produce human capital on the one hand and provide research services on the other. These effects must also be estimated in order to arrive at an overall picture of the returns from research and teaching.

* Otto von Guericke University Magdeburg

Funding: Ministry of Culture

Cooperation: IWH, Harz University of Applied Sciences

BIOLOG - Analysis of the Conditions for a Rational Biodiversity Policy for an EU Integrated Germany

Dipl. Biol. Dr. Andreas Hoffmann, Dipl. Kfm. Sönke Hoffmann*, Dipl. Kfm. Marco Ehlebe, Dipl. Vw. Stefanie Richter

Duration: 2001 - 2003


The worldwide loss of biodiversity is essentially due to the anthropogenic use of the biosphere. Although mankind's economic activities lead on the one hand to welfare gains, on the other hand the costs arising from the loss of species are only very incompletely included in the cost-benefit analysis of human activities. The project aims to find a measure for biodiversity that can provide a suitable basis for the necessary assessment of yields and costs of biodiversity conservation measures. Building on this operationalisation of biodiversity measures, one of the main objectives is to identify the socially beneficial biodiversity and to identify suitable instruments for achieving this goal. Standard methods of economic theory will be used to assess the instruments, focusing on the questions of the design of property rights and the utilization of markets as allocation instruments, in order to ultimately take species diversity into account as a scarce resource in the national accounts.
Starting from the characterisation of a rational national biodiversity policy, the project will also focus on international aspects. The aim is to examine how the biodiversity policy of the European Community is in line with the national concept developed, which perspectives are opened up by the eastern enlargement of the EU, which instruments are available in negotiations with third countries and how these are to be evaluated.
In the realisation of the individual sub-objectives of the project, standard economic theory will have to be applied in many places, which will be taken essentially from the areas of allocation theory, environmental economics and economic federalism theory, supplemented by game theory approaches, for example to describe international negotiations.

* Otto von Guericke University Magdeburg

Funding: BMBF

Focus: Global Change: Biosphere Research, Subarea "Terrestrial Biodiversity Research" (BIOLOG)

Experimental research on the role of communication and media in two-person games

Dipl. Vw. Bodo Storm*

Duration: 2000 - 2002


The project is intended to contribute to clarifying the question of what effects communication has on the behaviour of players in conflict situations. A conflict situation is a confrontation between two players who have to divide a fixed or variable amount among themselves. This includes situations in which the players can realize efficiency gains as well as those with a fixed payout amount. The information distribution can be symmetrical, asymmetrical, complete or incomplete. In this way, a large number of games are recorded which are described in detail in the literature but which have not yet been directly related and for which the effect of communication has not yet been investigated. On the one hand, the project aims to create a uniform framework for this large class of conflict games in order to enable direct comparisons, and on the other hand to shed light on the previously neglected aspect of communication.

* Otto von Guericke University Magdeburg

Funding: DFG

Experimental economic research as an instrument for dealing with environmental economic problems

Dipl. Vw. Bodo Storm*

Duration: 1999 - 2001

There are numerous points of contact between experimental research and environmental economics, which have led to a large number of experimental studies devoted to environmentally relevant problems. The project has two objectives. Firstly, a systematic overview of the hitherto very heterogeneous experimental research on environmental problems is to be developed. Secondly, methodological aspects of the application of the experimental method to environmental-economic problems are to be investigated. In particular, the identification of direct and indirect links between experimental research and environmental economics is the focus.

* Otto von Guericke University Magdeburg

Funding: DFG

Focus: People and Global Environmental Change

Economic effects of ageing in Saxony-Anhalt

Prof. Dr. Weimann*, Prof. Dr. Wellisch


* Otto-von-Guericke University Magdeburg

Funding: Ministry of Economy LSA

Cooperation: Empirica - Berlin

Experiments on Simplified Bargaining Games

Prof. Dr. Weimann*, Dr. Chun-Lei Yang

Duration: 1997 - 1999



* Otto von Guericke University Magdeburg

Funding: DAAD

Focus: "Project-related personal exchange with Hong Kong and Taiwan".

Experimental studies on the role of communication, reciprocity and media in cooperation in large groups

Prof. Dr. Weimann*

Duration: 1997 - 1999

The project is intended to contribute to solving cooperation problems. The focus is on the economic significance of the problem of social dilemmas. Dilemma situations are the core of serious allocation problems. A characteristic feature is the fact that large groups are affected. This fact has hardly been taken into account in the literature so far. Specifically, two problem complexes are to be dealt with:

1] Recently, the thesis has been discussed that reciprocity is an essential determinant of individual behaviour in dictatorial and ultimatum games. It will be examined whether this thesis can be supported, whether a relationship to the cooperation problem can be established, and whether reciprocity also plays a role in large groups.

2] In view of the experimental findings, the importance of face-to-face communication for coping with cooperation problems in small groups is undoubted. In large groups, however, communication is generally not bidirectional and is necessarily media-mediated. Whether this form of communication can have the same effect as conversation in a small group is not yet known. It will therefore be examined how the effect of communication depends on the form of communication. At the same time, this opens up a new approach to media impact research.


* Otto von Guericke University Magdeburg

Funding: DFG, Ministry of Education and Cultural Affairs Saxony-Anhalt

Status, embedding and presentation effects in cooperation experiments and contingent evaluation procedures

Prof. Dr. Weimann*

Duration: 1997 - 1998

Within the framework of the project, laboratory experiments will be carried out to investigate the extent to which the concrete context and the type of presentation influence the behaviour of test subjects in so-called free-rider and rent-seeking situations.

* Otto von Guericke University Magdeburg

Funding: Ministry of Culture of the State of Saxony-Anhalt

Experimental investigations on rational behaviour in dilemma situations and on solidarity behaviour under uncertainty

Prof. Dr. Weimann*

Duration: 1995 - 1996


Within the framework of the project, a total of four different experimental investigations are to be carried out. In all four cases results of earlier experiments are already available. The planned follow-up experiments will serve, among other things, to answer questions arising from the first experiments. In detail, the following subprojects are involved:

1] An experiment on road pricing to answer the question of whether the efficiency gains promised can actually be realised through road user charges.

2] An attempt at rent-seeking to test new approaches to overcoming the Tullock paradox.

3] A standard free driver experiment and a solidarity experiment. The aim of the new experiments is, among other things, to check whether behavioural differences between West German and East German students can be detected.

* Otto-von-Guericke University Magdeburg

Funding: DFG