News | Page 2 | Professorship of Economics with a focus on Behavioural and Digital Economics

Article 'Salient Cues and Complexity' accepted for publication in Management Science.

Important decisions are often complex, and previous findings suggest that complexity can influence economic decisions. However, it remains an open question as to when and how exactly complexity plays a role. We hypothesize that salient cues mitigate the effect of complexity on decisions. We derive this hypothesis theoretically from the literature and experimentally test it in the context of portfolio decisions.

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Article 'Optimal Stopping in a Dynamic Salience Model' accepted for publication in the International Economic Review.

We investigate dynamic risk decisions according to the salience theory by deriving hypotheses on dynamic risk decisions theoretically and then experimentally testing them. The results support all hypotheses. We also observe a strong correlation between static and dynamic decisions, suggesting that the salience theory can coherently explain risk decisions in both static and dynamic contexts. Our findings contribute to understanding when people acquire and sell financial products, how they behave in gambling, and when they enter or retire from the labor market.

Article "Why "Energy Price Brakes" Encourage Moral Hazard, Raise Energy Prices, and Reinforce Energy Savings " accepted for publication in the RAND Journal of Economics

In order to support households and businesses in the face of skyrocketing energy costs following the Russian invasion of Ukraine, the German government has introduced the so-called "energy price brakes". The special feature of this relief measure is that it provides for a lump-sum payment, which increases in the contractually fixed energy price per unit of energy.

Article "On Correlated Lotteries in Economic Applications" accepted for publication in the Journal of Economic Behavior and Organization

Models and experiments in decision theory usually use simple risks with only a few possible outcomes. Markus Dertwinkel-Kalt from the University of Münster, Sebastian Ebert from the University of Heidelberg, and Mats Köster from the Central European University investigate the correlation of such simple risks and discuss their relevance for a variety of economic and financial theoretical applications such as testing behavioral economic models, learning from correlated signals, portfolio selection, or even "rational inattention" and "Bayesian persuasion".

Price discrimination and geoblocking - new publication in the Journal of Industrial Economics

When different customer groups pay different prices for the same goods and services, this is referred to as third-degree price discrimination. Companies use this common practice, for example, to charge different prices for digital products in different countries of the EU. This requires geoblocking, i.e., restricting access to online content or services based on the user's geographic location.

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DFG Project: Corporate Responses to Undirected Allocation of Attention

also started in September 2023

When an economic decision has to be made, a large amount of information about the options is usually available, whereas the human mental capacity to process all this information is very limited. Human attention is, at least in part, not actively directed, but automatically drawn to the salient aspects of the decision environment. Little is known, however, about what incentives companies have to exploit such attention effects.

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DFG Project: Designing Financial Products to Exploit Limited Attention of Retail Investors

started in September 2023

In this four-year project, Markus Dertwinkel-Kalt from the University of Münster and André Romahn from HHU Düsseldorf are investigating the effects of limited attention on the investment behavior of retail investors. For this purpose, they use experimental as well as field or market data. They are particularly interested in salience effects that firms can exploit with little effort, i.e., those related to the labeling of financial products, to their relative positioning, and to the marketing of particular investment strategies.

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Kick-off meeting for the project "ClimLabels - Transformation Labels in Climate Finance"

The project "ClimLabels - Transformation Labels in Climate Finance", funded within the BMBF funding guideline Climate Protection and Finance (KlimFi), has started. For the kick-off meeting on February 26 and 27, 2023, we had the pleasure to welcome our project partners Prof. Dr. Andreas Löschel and Dr. Christoph Feldhaus (both Ruhr-Universität Bochum), Ingmar Jürgens and Malte Hessenius (both Climate & Company, Berlin), Christine Laudenbach (SAFE Frankfurt) and Katrin Gödker (Bocconi University) in Münster and thank them for a productive meeting!

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New publication in the Journal of Industrial Economics: „Resale Price Maintenance in a Successive Monopoly Model“

(joint with Christian Wey)

Did you ever wonder why manufacturers often seek to impose minimum retail prices on their retailers? The practice of a manufacturer enforcing retail prices is known as resale price maintenance (RPM), and this can either come in the form of a maximum retail price (max RPM) or a minimum retail price (min RPM), which is the more controversial issue in antitrust regulations.