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Working time autonomy is often accompanied by output-based incentives to counterbalance the loss of monitoring that comes with granting autonomy. However, in such settings, overprovision of effort could arise if workers are uncertain whether their performance suffices to secure the output-based rewards. Performance feedback can reduce or eliminate such uncertainty. We develop an experiment to show that overprovision of costly effort is more likely to occur in work environments with working time autonomy in the absence of feedback. A key feature of our design is that it allows for a clean measurement of effort overprovision by keeping performance per unit of time fixed, which we achieve by calibrating subjects' productivity on a real effort task ex ante. This novel design can serve as a workhorse for various experiments as it allows for exogenous variation of perfor-mance certainty (i.e., by providing feedback), working time autonomy, productivity, effort costs, and the general incentive structure. We find that subjects provide significantly more costly effort beyond a level necessary to meet their performance targets in the presence of uncertainty, i.e., the absence of feedback, which suggests that feedback shields workers from overprovision of costly effort.

Abschlussorientierte Weiterbildungen können für Geringqualifizierte ein probates Mittel sein, umihre Beschäftigungs- und Verdienstmöglichkeiten in einer sich stetig wandelnden Arbeitswelt zuverbessern. Häufig werden aber finanzielle Gründe als Hinderungsgrund genannt, wenn es umHindernisse mit Blick auf eine mögliche Teilnahme geht. Die Politik hatte sich mit der im Jahr2016 eingeführten und zunächst zeitlich befristeten Weiterbildungsprämie zum Ziel gesetzt,finanzielle Anreize für die Aufnahme einer abschlussorientierten Weiterbildung zu setzen. Beieinem erfolgreichen Abschluss erhalten die Geförderten hierdurch insgesamt 2.500 Euro. Deraktuelle Gesetzentwurf für das Bürgergeld greift dieses auf und sieht vor, die Prämienregelung zuentfristen und zudem ein monatliches Weiterbildungsgeld von 150 Euro einzuführen, daszusätzlich zum Arbeitslosengeld oder dem neu eingeführten Bürgergeld gezahlt werden wird.Dieser Beitrag präsentiert Ergebnisse aus einer Online-Befragung von Arbeitslosen ohneBerufsabschluss, die Arbeitslosengeld beziehen – einer zentralen Zielgruppeabschlussorientierter Weiterbildungsmaßnahmen. Themen der Befragung waren die Kenntnisder Fördermöglichkeiten, die mögliche Anreizwirkung von Weiterbildungsprämie undWeiterbildungsgeld sowie Kriterien für die Attraktivität von Umschulungen. Die Ergebnisse sollendazu beitragen, die Bedeutung der geplanten Änderungen einzuschätzen und mögliche weitereHandlungsfelder aufzeigen.Gefragt wurde zunächst, inwieweit die Teilnehmenden wissen, dass es die Möglichkeitgeförderter Umschulungen gibt und dass seit 2016 eine Weiterbildungsprämie bei erfolgreichemAbschluss ausgezahlt wird. Gut der Hälfte der Befragten war die Möglichkeit der Förderung vonUmschulungen bekannt, jede achte befragte Person hatte schon von der Weiterbildungsprämiegehört.Ein zweites zentrales Thema der Befragung war die Weiterbildungsbereitschaft. Gut 70 Prozentkönnten sich grundsätzlich (eher) vorstellen. an einer Umschulung teilzunehmen, während einFünftel dies (eher) verneinte. Die Teilnahmebereitschaft verändert sich dabei kaum, wenn auf dieMöglichkeit zum Erhalt einer Weiterbildungsprämie oder eines monatlichen zusätzlichenWeiterbildungsgeldes verwiesen wird.Schließlich wurde erhoben, welche Kriterien für die Befragten relevant sind, um an einergeförderten Umschulung teilzunehmen. Als (eher) wichtige Kriterien für die Attraktivität einersolchen Berufsausbildung wurden von fast 90 Prozent ein passendes Berufsziel und – nach derUmschulung – interessantere Aufgaben, bessere Berufschancen und ein besserer Verdienstangegeben. Weiterbildungsgeld und Weiterbildungsprämie sahen 60 bzw. 71 Prozent als (eher)wichtig an.Vor dem Hintergrund der Befunde sollten mögliche Zielgruppen gegebenenfalls noch intensiverüber die geförderte Weiterbildungsmöglichkeiten sowie über die finanzielle Förderung derTeilnahme an abschlussorientierten geförderten Weiterbildungen informiert werden. Zudemzeigt sich, dass finanzielle Fördermöglichkeiten in der Gruppe der Befragten zwar mehrheitlichals (eher) wichtig angesehen werden, andere Aspekte aber eine noch gewichtigere Rolle spielen.IAB-Forschungsbericht 18|2022 6Hierzu gehören neben dem passenden Berufsziel insbesondere die zu erwartenden Folgen einerWeiterbildung für die individuellen Arbeitsmarktchancen. Darüber besser aufzuklären könnte dieAttraktivität einer abschlussorientierten Weiterbildung möglicherweise erhöhen. Auf diese Weiseließe sich eventuell auch die Zahl der Arbeitslosen verringern, die bisher keineTeilnahmebereitschaft zeigen (der Befragung zufolge sind dies etwa 20 Prozent der Betroffenen).Die Bundesagentur für Arbeit hat als Informationsquelle für alle an Berufswechseln interessiertenPersonen das Online-Tool New Plan entwickelt, das (unter anderem) Inspirationen fürBerufswechsel gibt und Informationen über etwaige Alternativberufe (etwa zu den damitverbundenen Verdienstmöglichkeiten) zur Verfügung stellt. Informationen zu denFörderwirkungen beruflicher Weiterbildung für die Teilnehmenden im Vergleich zu einer Gruppe„statistischer Zwillinge“ können die Arbeitsagenturen – differenziert nach einer Vielzahl vonMerkmalen – aus der Wirkungsanalyse TrEffeR (Treatment Effects and Prediction) derBundesagentur für Arbeit abrufen., IAB-Forschungsbericht

Social science research has stressed the important role of religion in sustaining cooperation among non-kin. We contribute to this literature with a large-scale empirical study documenting the relationship between religion and cooperation. We analyze newly available, experimentally validated, and globally representative data on social preferences and world religions (Christianity, Islam, Hinduism, Buddhism and Judaism). We find that individuals who report believing in such religions also exhibit more prosocial preferences, as measured by their levels of positive reciprocity, altruism and trust. We further document heterogeneous patterns of negative reciprocity and punishment—two key elements for cooperation—across world religions. The association between religion and prosocial preferences is stronger in more populous societies and weaker in countries with better institutions. The interactive results between these variables point again towards the substitutability between religious and secular institutions, when it comes to sustaining cooperation.

This paper studies the relationship between income inequality and risk taking. Increased income inequality is likely to enlarge the scope for upward comparisons and, in the presence of reference-dependent preferences, to increase willingness to take risks. Using a globally representative dataset on risk preference in 76 countries, we empirically document that the distribution of income in a country has a positive and significant link with the preference for risk. This relationship is remarkably precise and holds across countries and individuals, as well as alternate measures of inequality. We find evidence that individuals who are more able to understand inequality and individuals who fall behind their inherent point of reference increase their preference for risk. Two complementary instrumental variable approaches support a causal interpretation of our results.

This paper studies the relationship between patience and comparative development through a combination of reduced-form analyses and model estimations. Based on a globally representative dataset on time preference in 76 countries, we document two sets of stylized facts. First, patience is strongly correlated with both per capita income and the accumulation of physical capital, human capital and productivity. These correlations hold across countries, subnational regions, and individuals. Second, the quantitative magnitude of the patience elasticity strongly increases in the level of aggregation. To provide an interpretive lens for these patterns, we analyze an OLG model in which savings and education decisions are endogenous to patience, and aggregate production is characterized by capital-skill complementarities. This model reconciles both the correlations between patience and macroeconomic variables as well as the substantial amplification of patience elasticities at higher levels of aggregation. The results of model estimations resemble the reduced-form patterns and suggest that cross-country variation in productivity plays an important role in generating the observed comparative development patterns and aggregation effects.

In this paper, we provide an explanation for why risk taking is related to optimism. Using a laboratory experiment, we show that the degree of optimism predicts whether people tend to focus on the positive or negative outcomes of risky decisions. While optimists tend to focus on the good outcomes, pessimists focus on the bad outcomes of risk. The tendency to focus on good or bad outcomes of risk in turn affects both the self-reported willingness to take risk and actual risktaking behavior. This suggests that dispositional optimism may affect risk taking mainly by shifting attention to specific outcomes rather than causing misperception of probabilities. In line with this, in a second study we find evidence that dispositional optimism is related to elicited parameters of rank dependent utility theory suggesting that focusing may be among the psychological determinants of decision weights. Finally, we corroborate our findings with process data related to focusing showing that optimists tend to remember more and attend more to good outcomes and this in turn affects their risk taking.

We conduct a discrete choice experiment to investigate how the mission of high-tech companies affects job attractiveness and induces self-selection of science and engineering graduates with respect to their prosocial attitudes. We characterize mission by whether or not the company combines its profit motive with a mission on innovation or corporate social responsibility (CSR). Furthermore, we vary job design (e.g. autonomy) and contractible job attributes (e.g. job security). We find that companies with a mission on innovation or CSR are considered more attractive. Women and individuals who are more altruistic and less competitive feel particularly attracted to such companies.

We conduct laboratory experiments to investigate basic predictions of principal-agent theory about the choice of piece rate contracts in the presence of output risk, and provide novel insights that reference dependent preferences affect the tradeoff between risk and incentives. Subjects in our experiments choose their compensation for performing a real-effort task from a menu of linear piece rate and fixed payment combinations. As classical principal-agent models predict, more risk averse individuals choose lower piece rates. However, in contrast to those predictions, we find that low-productivity risk averse workers choose higher piece rates when the riskiness of the environment increases. We hypothesize that reference points affect piece rate choice in risky environments, such that individuals whose expected earnings would exceed (fall below) the reference point in a risk-free environment behave risk averse (seeking) in risky environments. In a second experiment, we exogeno usly manipulate reference points and confirm this hypothesis.

Deferred payments, as implicit contracts, are predicted to bind workers to firms as long as workers believe that firms adhere to these implicit contracts. We employ a unique personnel data set from a Russian manufacturing firm to investigate whether wage arrears, delayed payments of wages, induce bonding effects. We find that workers' separation rates decrease dramatically when workers experience wage arrears, providing evidence for the bonding effects of deferred compensation schemes. After workers are repaid nominal wages, but have suffered real wage losses due to unexpectedly high inflation, we observe that workers affected by wage arrears again become much more likely to separate during and after the repayment period of a second episode of wage arrears, providing evidence for the weakening of the bonding effect after the firm's reputation for adequately compensating for deferred payments has been jeopardized.

People differ in their willingness to take risks. Recent work found that revealed preference tasks (e.g., laboratory lotteries) - a dominant class of measures - are outperformed by survey-based stated preferences, which are more stable and predict real-world risk taking across different domains. How can stated preferences, often criticised as inconsequential "cheap talk," be more valid and predictive than controlled, incentivized lotteries? In our multimethod study, over 3,000 respondents from population samples answered a single widely used and predictive risk preference question. Respondents then explained the reasoning behind their answer. They tended to recount diagnostic behaviours and experiences, focusing on voluntary, consequential acts and experiences from which they seemed to infer their risk preference. We found that third-party readers of respondents' brief memories and explanations reached similar inferences about respondents' preferences, indicating the intersubjective validity of this information. Our results help unpack the self-perception behind stated risk preferences that permits people to draw upon their own understanding of what constitutes diagnostic behaviours and experiences, as revealed in high-stakes situations in the real world.

We shed new light on the relationship between cognition and patience, by providing documenting that the correlation between cognitive abilities and delay discounting is weaker for the same group of individuals if choices are incentivized. We conjecture that the exertion of higher cognitive effort, which induces higher involvement of the cognitive system, moderates the relationship between patience and cognition. To test this hypothesis, we analyze the relationship between various measures of cognitive ability, including the cognitive reffection test (CRT), a symbol-correspondence test, a numeracy test, as well as self-reported math ability and the interviewer's assessment of the respondent's sharpness and understanding, and different measures of patience, including incentivized choices between smaller sooner and larger later monetary payments and hypothetical inter-temporal trade-offs, for 107 subjects drawn from the adult population in Tbilisi (Georgia).

We empirically investigate the link between parental involvement and shaping of the economic preferences, attitudes and personality traits of their children. We exploit information on the risk and trust attitudes, the Big Five personality traits and locus of control of parents and their children, as well as rich information about parental efforts in the upbringing of their children from the German Socio-Economic Panel Study. Our results show that parents who are more involved in the upbringing of their children have children with more favourable attitudes and traits. These children rank higher in traits that further their success in life, and they are more similar to their parents in those attitudes, where the optimum level is more ambiguous.

Governments are showing an increasing interest in quantitative models that give insights into the determinants of unemployment duration. Yet, these models oftentimes do not explicitly take into account that unemployment prospects are influenced by personality characteristics that are not being fully captured by variables in administrative data. Using German survey data linked with administrative data, we show that numeracy skills are strongly related to unemployment duration, while at the same time we confirm well-established patterns documented in the literature. Low numeracy is strongly related to a longer unemployment duration of workers below median age (33) in our sample, even after including a rich set of controls. We find that unrealistic reservation wages are not the main driver, nor do results seem to be driven by locking-in effects caused by programme participation. On the other hand, the absence of a relationship between numeracy and unemployment duration for older workers might well be driven by a locking-in effect for those with high numeracy, as they tend to commit more often to intensive training programmes. Another tentative explanation, which is supported by the data, is that younger people have fewer signals to send such that their cognitive abilities may have a higher relative signalling value.

We show that the disposition to focus on favorable or unfavorable outcomes of risky situations affects willingness to take risk as measured by the general risk question. We demonstrate that this disposition, which we call risk conception, is strongly associated with optimism, a stable facet of personality and that it predicts real-life risk taking. The general risk question captures this disposition alongside pure risk preference. This enlightens why the general risk question is a better predictor of behavior under risk across different domains than measures of pure risk preference. Our results also rationalize why risk taking is related to optimism.

This paper focuses on the relationship between cognitive ability and decision making under risk and uncertainty. We begin by clarifying some important distinctions between concepts and measurement of risk preference and cognitive ability and then take stock of what is known empirically on the connections between cognitive ability and measured risk preferences.

This paper studies the global variation in economic preferences. For this purpose, we present the Global Preference Survey (GPS), an experimentally validated survey dataset of time preference, risk preference, positive and negative reciprocity, altruism, and trust from 80,000 individuals in 76 countries. The data reveal substantial heterogeneity in preferences across countries, but even larger within-country heterogeneity. Across individuals, preferences vary with age, gender, and cognitive ability, yet these relationships appear partly country specific. At the country level, the data reveal correlations between preferences and bio-geographic and cultural variables such as agricultural suitability, language structure, and religion. Variation in preferences is also correlated with economic outcomes and behaviors. Within countries and subnational regions, preferences are linked to individual savings decisions, labor market choices, and prosocial behaviors. Across countries, preferences vary with aggregate outcomes ranging from per capita income, to entrepreneurial activities, to the frequency of armed conflicts.

This paper presents an experimentally validated survey module to measure six key economic preferences – risk aversion, discounting, trust, altruism, positive and negative reciprocity – in a reliable, parsimonious and cost-effective way. The survey instruments included in the module were the best predictors of preferences revealed in incentivized choice experiments. We also offer a streamlined version of the module that has been optimized and piloted for applications where time efficiency and simplicity are paramount, such as international telephone surveys.

This paper presents the Global Preference Survey, a globally representative dataset on risk and time preferences, positive and negative reciprocity, altruism, and trust. We collected these preference data as well as a rich set of covariates for 80,000 individuals, drawn as representative samples from 76 countries around the world, representing 90 percent of both the world's population and global income. The global distribution of preferences exhibits substantial variation across countries, which is partly systematic: certain preferences appear in combination, and follow distinct economic, institutional, and geographic patterns. The heterogeneity in preferences across individuals is even more pronounced and varies systematically with age, gender, and cognitive ability. Around the world, our preference measures are predictive of a wide range of individual-level behaviors including savings and schooling decisions, labor market and health choices, prosocial behaviors, and family structure. We also shed light on the cultural origins of preference variation around the globe using data on language structure.

We relate risk attitudes and patience of young graduates from high-school, college and university, measured around the time that they start their labor market career in a large representative survey, to the riskiness and timing of earnings in the occupations they choose to work in. We find a systematic positive and significant relation between willingness to take risks and measures of occupational earnings risks and employment risk that we derive from a large administrative data set. Patient individuals are significantly more likely to choose for occupations with a steep earnings profile. Individuals whose economic preferences are not well aligned with the riskiness and timing of earnings in their initial occupation are more likely to change to an occupation that better matches their economic preferences.

In the past decades, behavioural economics has become an influential and important field of economics. Interest in behavioural economics derives from unease with standard economic models that are based on restrictive assumptions, which confine the nature of human motivation. Although Adam Smith, the founding father of modern economics, had highlighted the multitude of psychological motives that drive human behaviour, and despite the fact that many influential economists thereafter believed in tenets of modern behavioural economics, the homo economicus assumption became prevalent, until this construct was challenged by compelling evidence on social, cognitive and emotional factors that drive decision-making and social interaction. Since human interaction is germane to labour markets, one would expect behavioural economics to be highly relevant for labour economics. This paper gauges whether and how behavioural economics has left its mark on labour economics, considers the timing and structure of this development, and contemplates its future impact on labour economics.

We study empirically whether there is scope for parents to shape the economic preferences and attitudes of their children through purposeful investments. We exploit information on the risk and trust attitudes of parents and their children, as well as rich information about parental efforts in the upbringing of their children from the German Socio-Economic Panel Study. Our results show that parents who invest more in the upbringing of their children are more similar to them with respect to risk and trust attitudes and thus transmit their own attitudes more strongly. The results are robust to including variables on the relationship between children and parents, family size, and the parents' socioeconomic background.

We document the importance of negatively reciprocal inclinations in labor relationships by showing that a retrenchment of pension rights, which is perceived as unfair, causes a larger reduction in job motivation the stronger workers' negatively reciprocal inclinations are. We exploit unique matched survey and administrative data on male employees in the public sector in the Netherlands and compare the job motivation of employees born in 1950, who faced a substantial retrenchment of their pension rights resulting from a pension reform in 2006, to that of slightly older employees who remain entitled to more generous pension benefits. Job motivation is significantly lower among negatively reciprocal employees who were affected by the reform. The negative effect on job motivation is greater for negative reciprocal employees born very shortly after the cut-off date of January 1, 1950, as well as for those with many untreated colleagues, and who therefore arguably perceive the policy change as being more unfair. We also find that the treatment effect is stronger among workers who are more likely to hold their employer accountable for the drop in their pension rights, that is, those who work for the national government.

Although both economists and psychologists seek to identify determinants of heterogeneity in behavior, they use different concepts to capture them. In this review we first analyze the extent to which economic preferences and psychological concepts of personality - such as the Big Five and locus of control - are related. We analyze data from incentivized laboratory experiments and representative samples and find only low degrees of association between economic preferences and personality. We then regress life outcomes - such as labor market success, health status and life satisfaction - simultaneously on preference and personality measures. The analysis reveals that the two concepts are rather complementary when it comes to explaining heterogeneity in important life outcomes and behavior.

This study presents results of the validation of an ultra-short survey measure of patience included in the German Socio-Economic Panel (SOEP). Survey responses predict intertemporal choice behavior in incentive-compatible decisions in a representative sample of the German adult population.

We present a semiparametric method to estimate group-level dispersion, which is particularly effective in the presence of censored data. We apply this procedure to obtain measures of occupation-specific wage dispersion using top-coded administrative wage data from the German IAB Employment Sample (IABS). We then relate these robust measures of earnings risk to the risk attitudes of individuals working in these occupations. We find that willingness to take risk is positively correlated with the wage dispersion of an individual's occupation.

We compare different designs that have been used to test for an impact of time horizon on discounting, using real incentives and two representative data sets. With the most commonly used type of design we replicate the typical finding of declining (hyperbolic) discounting, but with other designs find constant or increasing discounting. As a whole, the data are not consistent with any of these usual candidate discounting assumptions, and they also imply a violation of transitivity. The results have implications for interpreting previous evidence, and pose an important puzzle for understanding inter-temporal choice.

Is the way that people make risky choices, or tradeoffs over time, related to cognitive ability? This paper investigates whether there is a link between cognitive ability, risk aversion, and impatience, using a representative sample of the population and incentive compatible measures. We conduct choice experiments measuring risk aversion, and impatience over an annual time horizon, for a randomly drawn sample of roughly 1,000 German adults. Subjects also take part in two different tests of cognitive ability, which correspond to sub-modules of one of the most widely used IQ tests. Interviews are conducted in subjects' own homes. We find that lower cognitive ability is associated with significantly more impatient behavior in the experiments, and with greater risk aversion. This relationship is robust to controlling for personal characteristics, educational attainment, income, and measures of credit constraints. We perform a series of additional robustness checks, which help rule out other possible confounds.

Many economic decisions involve a substantial amount of uncertainty, and therefore crucially depend on how individuals process probabilistic information. In this paper, we investigate the capability for probability judgment in a representative sample of the German population. Our results show that almost a third of the respondents exhibits systematically biased perceptions of probability. The findings also indicate that the observed biases are related to individual economic outcomes, which suggests potential policy relevance of our findings.

In this paper we discuss the complementarity of laboratory and field data. Experiments offer highly controlled environments that allow precise testing and causal inferences. Survey and field data on the other hand provide information on large and representative samples of people interacting in their natural environment. We discuss several concrete examples how to combine lab and field data and how to exploit potential complementarities. One example describes an experiment, which is run with a representative sample to guarantee control and representativeness. The second example is based on the idea to experimentally validate survey instruments to ensure behavioral validity of instruments that can be used in existing panel data sets. The third example describes the possibility to use the lab to identify causal effects, which are tested in large data sets. Topics discussed in this paper comprise the relation of cognitive skills (IQ) and risk and time preferences, determinants, prevalence and economic consequences of risk attitudes, selection into incentive schemes and the impact of unfair pay on stress.

Recent theoretical contributions depart from the usual practice of treating individual attitude endowments as a black box, by assuming that these are shaped by the attitudes of parents and other role models. Attitudes include fundamental preferences such as risk preference, and crucial beliefs about the world, such as trust. This paper provides evidence on the three main mechanisms for attitude transmission highlighted in the theoretical literature: (1) transmission of attitudes from parents to children; (2) positive assortative mating of parents, which tends to reinforce the impact of parents on the child; (3) an impact of prevailing attitudes in the local environment. Investigating these mechanisms is important because they are crucial assumptions underlying a large literature. It also sheds light on the basic question of where individual attitude endowments come from, and the factors that determine these drivers of economic behavior. The findings are supportive of attitude transmission models, and indicate that all three mechanisms play a role in shaping economically relevant attitudes.

We study the intrapersonal relationship between trust and reciprocity in a laboratory experiment. Reciprocal subjects trust significantly more than selfish ones. This finding raises questions about theories of social preferences which predict that fairer players should trust less.

Experimental evidence has convincingly shown the existence of reciprocal inclinations, i.e., a tendency for people to respond in-kind to hostile or kind actions. Little is known, however, about: (i) the prevalence of reciprocity in the population, (ii) individual determinants of reciprocity, (iii) the correlation between positive and negative inclinations within person, and (iv) consequences of reciprocal inclinations for wages, subjective well-being, friendships and other economic and social outcomes. Answering these questions requires moving out of the lab and using a large and representative subject pool, which combines information about subjects' reciprocal inclinations with extensive socioeconomic background information. In this paper we measure the reciprocal inclinations of 21,000 individuals. We show that most people state reciprocal inclinations, in particular in terms of positive reciprocity. However, there is substantial heterogeneity in the degree of reciprocity, and quite surprisingly, only a weak correlation between positive and negative reciprocity for an individual. In terms of determinants, being female, and increasing age, lead to greater positive and less negatively reciprocal tendencies. Taller people are more positively reciprocal, but height has no impact on negative reciprocity. The asymmetric impact of these determinants provides further indication that positive and negative reciprocity are fundamentally different traits, rather than the outcome of a single underlying tendency. In terms of economic implications, we provide the first evidence using a large representative survey that corroborates an important hypothesis arising from laboratory experiments: Positively reciprocal workers are in fact paid more, and exert greater effort, on the job. Moreover, positively reciprocal people are more likely to be employed, report having more close friends, and have a higher overall level of life satisfaction. In this sense, Homo Reciprocans - in the positive domain - is in fact more successful than his or her non-reciprocal fellows.

We investigate whether two crucial determinants of economic decision making willingness to take risks and willingness to trust other people are transmitted from parents to children. Our evidence is based on survey questions that ask about these attitudes directly, and are good measures in the sense that they reliably predict actual risk-taking and trusting behavior in large-scale, incentive compatible field experiments. We find a strong, significant, and robust correlation between the responses of parents and their children. Exploring heterogeneity in the strength of transmission, we find that gender of the child does not matter, but that children with fewer siblings, and firstborn children, are more strongly influenced by parents in terms of risk attitudes. Interestingly, for trust there is no impact of family size or birth order. There is some evidence of 'receptive' types: children who are similar to the father are similar to the mother, and children who are similar to parents in terms of risk are similar in terms of trust. We find that the transmission from parents to children is relatively specific, judging by questions that ask about willingness to take risks in specific contexts financial matters, health, career, car driving, and leisure activities. Finally, we provide evidence of positive assortative mating based on risk and trust attitudes, which reinforces the impact of parents on children. Our results have potentially important implications for understanding the mechanisms underlying cultural transmission, social mobility, and persistent differences in behavior across countries. More generally, our findings shed light on the basic question of where attitudes towards risk and trust come from.

This paper investigates whether risk preferences explain how individuals are sorted into occupations with different earnings variability. We exploit data from the German Socio-Economic Panel, which contains a subjective assessment of willingness to take risks whose behavioral relevance has been validated in previous work. As a measure of earnings risk, we use the cross-sectional variation in earnings that is left unexplained by human capital in Mincerian wage regressions. By relating earnings risk to the measure of individual risk preference, our evidence shows that individuals with low willingness to take risks are more likely to be sorted into occupations with low earnings risk. This pattern is found regardless of the level of occupation categories, region, gender and labor market experience. We also find that risk preferences are significant determinant of wages in a Mincer regression, illustrating the importance of preferences and attitudes in addition to more standard regressors.

This paper studies the impact of incentives on worker self-selection in a controlled laboratory experiment. In a first step we elicit subjects' productivity levels. Subjects then face the choice between a fixed or a variable payment scheme. Depending on the treatment, the variable payment is either a piece rate, a tournament or a revenue-sharing scheme. We elicit additional individual characteristics such as subjects' risk attitudes, measures of self-assessment and overconfidence, social preferences, gender and personality. We also elicit self-reported measures of work effort, stress and exhaustion. Our main findings are as follows. First, output is much higher in the variable pay schemes (piece rate, tournament, and revenue sharing) compared to the fixed payment scheme. Second, this difference is largely driven by productivity sorting. On average, the more productive a worker is, the more likely he self-selects into the variable pay scheme. Third, relative self-assessment and overconfidence affect worker self-selection, in particular into tournaments. Fourth, risk averse workers prefer fixed payments and are less likely to sort into variable pay schemes. Fifth, people endowed with social preferences are less likely to sort into tournaments. Sixth, variable pay schemes attract men more than women, a difference that is partly explained by gender-specific risk attitudes. Seventh, self-selection is also affected by personality differences. Finally, reported effort is significantly higher in all variable pay conditions than in the fixed wage condition. In sum, our findings underline the importance of multi-dimensional sorting, i.e., the tendency for different incentive schemes to systematically attract people with different abilities, preferences, self-assessments, gender and personalities.

Prominent economic theories have emphasized the role of commonly held perceptions and expectations for determining macroeconomic outcomes. A key empirical question is how such collectively held beliefs are formed. We use the FIFA World Cup 2006 as a natural experiment. We provide direct evidence that seemingly irrelevant events (the outcomes of soccer matches) can systematically affect individual perceptions about economic prospects, both on a personal and economy-wide level

Analyzing the neutrality of referees during twelve German premier league (1st Bundesliga) football seasons, this paper documents evidence that social forces influence agents' preferences and decisions. Those, who are appointed to be impartial, tend to favor the home team as they systematically award more injury time in close matches when the home team is behind. Referees also tend to favor the home team in decisions to award goals and penalty kicks. The composition of the crowd affects the size and the direction of the bias. The intensity of social pressure as measured by the crowd's proximity to the field determines how strongly referees' decisions are influenced. Not all agents are, however, affected to the same degree by social pressure.

High rewards or the threat of severe punishment do not only provide incentives to exert high levels of effort but also create pressure. Such pressure can cause paradoxical performance effects, namely performance decrements despite strong incentives and high motivation. By analyzing the performance of professional football players on a well-defined task, namely to score on a penalty kick, the paper provides empirical evidence for the existence of such detrimental incentive effects. Two pressure variables are considered in particular: (1) the importance of success and (2) the presence of spectators. There are plenty of situations in which pressure arises in the workplace. Knowing how individuals perform under pressure conditions is crucial for labor economists because it has implications for the design of the workplace and the design of incentive schemes.

This paper presents new evidence on the distribution of risk attitudes in the population, using a novel set of survey questions and a representative sample of roughly 22,000 individuals living in Germany. Using a question that asks about willingness to take risks on an 11-point scale, we find evidence of heterogeneity across individuals, and show that willingness to take risks is negatively related to age and being female, and positively related to height and parental education. We test the behavioral relevance of this survey measure by conducting a complementary field experiment, based on a representative sample of 450 subjects, and find that the measure is a good predictor of actual risk-taking behavior. We then use a more standard lottery question to measure risk preference, and find similar results regarding heterogeneity and determinants of risk preferences. The lottery question makes it possible to estimate the coefficient of relative risk aversion for each individual in the sample. Using five questions about willingness to take risks in specific domains – car driving, financial matters, sports and leisure, career, and health – the paper also studies the impact of context on risk attitudes, finding a strong but imperfect correlation across contexts. Using data on a collection of risky behaviors from different contexts, including traffic offenses, portfolio choice, smoking, occupational choice, participation in sports, and migration, the paper compares the predictive power of all of the risk measures. Strikingly, the general risk question predicts all behaviors whereas the standard lottery measure does not. The best overall predictor for any specific behavior is typically the corresponding context-specific measure. These findings call into the question the current preoccupation with lottery measures of risk preference, and point to variation in risk perceptions as an understudied determinant of risky behavior.

This paper presents new evidence on the distribution of risk attitudes in the population, using a novel set of survey questions and a representative sample of roughly 22,000 individuals living in Germany. Using a question that asks about willingness to take risks on an 11-point scale, we find evidence of heterogeneity across individuals, and show that willingness to take risks is negatively related to age and being female, and positively related to parental education and height. We test the behavioral relevance of this survey measure by conducting a complementary field experiment, based on a representative sample of 450 subjects, and find that the measure is a good predictor of actual risk-taking behavior. We use a more standard lottery question to measure risk preference, and find similar results regarding heterogeneity and determinants of risk preferences. We also estimate the coefficient of relative risk aversion for each individual in the sample based on lottery responses. Using five questions about willingness to take risks in specific domains - car driving, financial matters, sports and leisure, career, and health - the paper studies the impact of context on risk attitudes, finding a strong but imperfect correlation across contexts. Using data on a collection of risky behaviors from different contexts, including traffic offenses, portfolio choice, smoking, occupational choice, participation in sports, and migration, the paper compares the predictive power of all of the risk measures. Strikingly, the general risk question predicts all behaviors whereas the standard lottery measure does not. The best overall predictor for any specific behavior is typically the corresponding context-specific measure. These findings call into the question the current preoccupation with lottery measures of risk preference, and point to variation in risk perceptions as an understudied determinant of risky behavior.

This paper replicates studies by Medoff and Abraham (1980, 1981) and Flabbi and Ichino (2001) using personnel data from the Dutch national aircraft manufacturer Fokker. It shows how a formal salary system, as is widely used by large firms, brings about that seniority-wage profiles are largely independent of controls for reported performance in cross-sectional wage regressions even though supervisors' evaluations shape life-cycle earnings profiles. Performance ratings determine how fast a worker climbs the firm's career and wage ladder. The paper also reveals that real wage growth depends on the employer's prosperity. Furthermore it demonstrates that formal salary systems cause serial correlation in wage growth and 'Green Card' effects.

The research area of the new economics of personnel has a short but important and insightful history. Theory ahead of measurement asks for testing newly developed human resource concepts. These tests often need detailed firm-specific data. Repetition and comparison of results is key in finding out what holds true in general and what marks idiosyncrasy. In this paper, we compare results from the existing literature with the outcomes from analyzing personnel data of the Dutch aircraft manufacturer Fokker during the period January 1, 1987, the day the company started with their electronic personnel filing system, until March 15, 1996, the day the company filed for bankruptcy. We shed light on differences in the functioning of internal labor markets during periods of workforce growth and decline. We find multiple ports of entry that are concentrated in low blue and white-collar levels. New entrants are younger and have higher educational levels than incumbent workers who are promoted to similar jobs. Despite substantial variation in individual wages, careers are important as wages are strongly related to job levels. Promotion rates fall and demotion rates rise when the firm enters the stage of demise. Job-rotation improves promotion chances, stimulates wage growth, and reduces the lay-off risk.

Analyzing the neutrality of referees during nine German premier league (1. Bundesliga) soccer seasons, this paper documents evidence that social forces influence agents' preferences and decisions. Those, who are appointed to be impartial, tend to favor the home team as they systematically award more injury time in close matches when the home team is behind. Further evidence for similar home bias comes from referees' wrong, or at least disputable, decisions to award goals and penalty shots. The severity of social pressure, measured by the crowd's composition and proximity to the action, determines its effect. Not all agents are affected by social pressure to the same degree.

This paper develops a model that shows why high-skilled workers move more and are therefore unemployed less than low-skilled workers. The model can explain the paradoxical empirical regularity that higher owner-occupation rates are associated with higher levels of unemployment although home-owners tend to be unemployed less. The choice of housing tenure affects moving costs and thereby regional mobility and unemployment. The paper analyzes the impact of symmetric and asymmetric shocks on mobility and unemployment, and discusses effects of government intervention in the housing market. In addition, it is shown that moving costs reduce job search effort and search effectiveness.

This paper investigates differences in worker turnover characteristics between periods of workforce expansion and contraction in a firm. We derive a Cox proportional hazard model from a simple model of job separation based on the expected surpluses from the firm and its workers. We account for non-stationarity in the baseline hazard reversing the role of calendar time and employment duration (Imbens (1994)), and estimate the model using personnel data from a large Dutch aircraft manufacturer over a period from January 1987 until March 14th, 1996, one day before its bankruptcy. Performance evaluations, blue versus white collar employment, and career paths within the firm are found to play an important role explaining differences in turnover behavior. A generally important result is that smooth functional forms of the age effect on worker mobility can produce misleading results, blurring a better understanding of the design of early retirement schemes for corporate reorganizations.