TRR 190:  Rationality and Competition: The Economic Performance of Individuals and Firms

Subject Area Social and Behavioural Sciences
Term since 2017
Project identifier Deutsche Forschungsgemeinschaft (DFG) - Project number 280092119
 

Project Description

The CRC TRR "Rationality and Competition" combines approaches from "behavioral" and "neoclassical" economics to analyze applied economic issues and to develop policy solutions that are robust to deviations from perfectly rational behavior. Behavioral economics is a dynamic field that develops new approaches at a high rate. It has traditionally focused on non-standard preferences, such as loss aversion, present bias or social preferences, but recent research has emphasized that biases in beliefs and cognition, such as motivated beliefs and overconfidence, are also of major importance. The CRC is at the forefront of this development and will continue its work on combining new basic concepts with economic applications. The CRC is also evolving in terms of its methods. Having relied on laboratory and field experiments for a long time, behavioral economics now shifts towards more online experiments and surveys. Again, the CRC has been a driver of this transition and will continue in this role. It will also continue to work with observational data, benefitting from ever-growing data sets and from novel statistical methods, and exploring new ways to combine the above-mentioned tools. The CRC has a broad research portfolio including work packages in the economics of education, public economics, health economics, labor economics, environmental economics, industrial organization, market and mechanism design, economic geography, marketing, economic history and parts of macroeconomics. In each of these fields, the combination of neoclassical and behavioral insights has proven highly valuable. In its second funding period, the CRC has made many scientific contributions, reflected in hundreds of research papers, many published in top journals, and other outputs. The CRC’s balance sheet has improved significantly compared to the already very successful first funding period. As was planned from the beginning of the CRC, the third funding period will see an increased focus on economic policy applications, and we are adjusting some of our research strategies accordingly. Our previous work has highlighted policy-relevant research areas that need to be explored in greater depth, notably innovation and artificial intelligence, climate policy, inequality and design of social policies, and the location decisions of firms and workers. These issues will be at the center of many economic policy debates in the next decade, and the CRC team has adjusted its composition in order to reflect the new foci, to develop behaviorally robust economic policy recommendations for them, and to further contribute to the general goal of overcoming the scholarly division between behavioral and neoclassical economists.
DFG Programme CRC/Transregios

Current projects

Completed projects

Applicant Institution Ludwig-Maximilians-Universität München
Participating University European School of Management and Technology Berlin; Hertie School
The University of Governance in Berlin
; Technische Universität Berlin
Participating Institution Deutsches Institut für Wirtschaftsforschung (DIW); Max-Planck-Institut für Innovation und Wettbewerb; Wissenschaftszentrum Berlin für Sozialforschung gGmbH (WZB); ifo Institut - Leibniz-Institut für Wirtschaftsforschung
an der Universität München e. V.
Co-Applicant Institution Humboldt-Universität zu Berlin
Spokespersons Professor Dr. Klaus Schmidt, since 1/2025; Professor Georg Weizsäcker, Ph.D., until 12/2024