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Price Carbon - I will if You Will

David J C MacKay, Peter Cramton, Axel Ockenfels and Steve Stoft
2015. Nature (Comment), 526, 315-316.

Was Volkswagen jetzt tun sollte

Peter Cramton and Axel Ockenfels
2015. Die Welt am Sonntag. 4 October, 32.

Surprising Gifts: Theory and Laboratory Evidence

Kiryl Khalmetski,  Axel Ockenfels and Peter Werner
2015. Journal of Economic Theory, 159, 163-208.

People do not only feel guilt from not living up to others' expectations (Battigalli and Dufwenberg (2007)), but may also like to exceed them. We propose a model that generalizes the guilt aversion model to capture the possibility of positive surprises when making gifts. A model extension allows decision makers to care about others' attribution of intentions behind surprises. We test the model in a series of dictator game experiments. We find a strong causal effect of recipients' expectations on dictators' transfers. Moreover, in line with our model, the correlation between transfers and expectations can be both positive and negative, obscuring the effect in the aggregate. Finally, we provide evidence that dictators care about what recipients know about the intentions behind surpris.

Timing of Kindness - Evidence from a Field Experiment

Axel Ockenfels, Dirk Sliwka and Peter Werner
2015. Journal of Economic Behavior and Organization, 111, 79–87.

We conduct a field experiment in a naturally occurring labor environment and track whether the performance of workers responds to unexpected wage increases. Specifically, we investigate how the timing of wage increases affects efforts. We find that workers' performance is substantially higher for the same total wage when their wage is increased in two steps as opposed to a single increase at the outset. Moreover, workers are more honest and are more willing to do voluntary extra work after surprising wage increases compared to a baseline condition without increases.

Impulse Balance and Multiple-period Feedback in the Newsvendor Game

Axel Ockenfels and Reinhard Selten
2015. Production and Operations Management, 24, 1901–1906.

Human subjects in the newsvendor game place suboptimal orders: orders are typically between the expected profit maximizing quantity and mean demand ("pull-to-center bias"). In previous work we have shown that impulse balance equilibrium (IBE), which is based on a simple ex-post rationality principle along with an equilibrium condition, can predict ordering decisions in the laboratory. In this paper, we extend IBE to standing orders and multiple-period feedback and show that it predicts - in line with previous findings - that constraining newsvendors to make a standing ­­­­order for a sequence of periods moves the average of submitted orders toward the optimum.

Social responsibility promotes conservative risk behavior

Gary Bolton, Axel Ockenfels and Julia Stauf
2015. European Economic Review, 74, 109-127.

Previous studies show that group risk taking can be more conservative than individual risk taking.  Two common, but untested reasons for this greater caution are the influence of social responsibility and a tendency to conform to the preferences of of others. We study changes in risk taking in simple settings, where another's risk taking can sometimes be observed, and where decisions affect not only one's own payoffs but sometimes also affect those of a passive, second party. We find that social responsibility leads to more conservative risk behavior in group decision making. Conformism has a more symmetric effect: Observing the choice of another tends to lead both individual and social decisions towards whatever the other’s expressed risk preference is.  Direct tests fail to link the social behavior we observe to the social preference for distributional fairness common in decision-making under certainty.

Spieltheorie für Anfänger

Axel Ockenfels
2015. Wirtschaftswoche. 17 July, 59.

Wie du mir, so ich dir

Axel Ockenfels
2015. DFG Forschung, 2, 10-13.

Ob im Internethandel, in betrieblichen Boni-Systemen oder bei multilateralen Verhandlungen – „Reziprozität“ kann ein Schlüssel zum Erfolg sein. Die Verhaltensökonomie will mit experimentellen Methoden und spieltheoretischen Modellen das Prinzip gezielt nutzbar machen.

An International Carbon-Price Commitment Promotes Cooperation

Peter Cramton, Axel Ockenfels and Steven Stoft
2015. Economics of Energy & Environmental Policy, 4(2), 51-64.

To promote cooperation in international climate negotiations, negotiators should focus on a common commitment. Such commitments have the advantage of facilitating reciprocal “I will if you will” agreements in a group. Reciprocity is the basis for cooperation in repeated public goods games, and a uniform price would provide a natural focal point for a common international commitment. Such a price is also essential for efficient abatement. Countries would retain flexibility in how to implement the price—with cap-and-trade, a carbon tax, or a hybrid approach. Country risk is reduced relative to risk under international cap-and-trade since carbon revenues stay within the country. Price commitments also tend to equalize effort intensity and can facilitate enforcement. To encourage participation by less-developed countries, a green fund is needed to transfer money from richer to poorer countries. Transfers are smaller and more predictable with a uniform price commitment than with international cap and trade.

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Symposium on International Climate Negotiations

Peter Cramton, Axel Ockenfels and Steven Stoft
2015. Economics of Energy & Environmental Policy, 4(2), 1-4.

Once again there is hope that a strong international agreement will emerge from the annual—now the 21st annual—United Nations Conference of the Parties. Before Kyoto, we hoped that the new Protocol would eventually grow into a universal commitment similar to reducing emissions by some percent below 1990 levels, and this would translate into a uniform price on carbon. Instead, repeated negotiation failures led the world to abandon the ideas of having a common commitment and a uniform price after the Copenhagen conference. In the hope of finding a way to repair these failures, we invited renowned experts on climate policy and the economics of cooperation, not just to present their ideas, but to discuss and debate them as they wrote their papers. The continuing discussion has been lively. All authors agree that what was lost at Copenhagen needs to be rediscovered, and that carbon price coherence is not all that is needed, but it is an essential element.

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Bonus Payments and Reference Point Violations

Axel Ockenfels, Dirk Sliwka and Peter Werner
2015. Management Science, 61(7), 1496-1513.

We investigate how bonus payments affect satisfaction and performance of managers in a large, multinational company. We find that falling behind a naturally occurring reference point for bonus comparisons reduces satisfaction and subsequent performance. The effects tend to be mitigated if information about one's relative standing towards the reference point is withheld.

(K)ein Strommarkt für die Energiewende

Axel Ockenfels und Achim Wambach
2015. Die Welt. 24 August, 10.