TRR 15: Governance and the Efficiency of Economic Systems
Final Report Abstract
The analysis of governance structures and their impact on the efficiency of economic systems has been the focus of the research conducted in the collaborative research center SFB/TR 15. Over the last twelve years we produced hundreds of theoretical, empirical and experimental studies and publications - 35 of which were published in the top five international economic journals. Many of our studies attracted a lot of interest in the scientific community, and some also received considerable attention in the media and in politics. Our research agenda consists of three main parts. In Research Area A we have worked on basic theoretical problems in contract and mechanism design theory, and we have extended this theory in several dimensions. In particular, we developed new models with multi-dimensional type spaces, with limited commitment, and with dynamic principal-agent relationships. We also introduced insights from behavioral economics into contract theory which turned out to be crucial for the understanding of the functioning of incomplete contracts. In Research Area B we studied governance structures in companies. Here, important contributions to the understanding of the financial crisis were made. Furthermore, we developed new regulatory approaches that can be useful to prevent similar crises in the future. These contributions did not only receive a lot of attention in the scientific community but also in the media and in politics. Furthermore, we studied how multinational enterprises react with their governance structures to the challenges of globalization, and how financial constraints affect innovation and growth of firms in developing countries. We also derived important new results on the optimal design of incentive and employment contracts. In Research Area C we studied the governance structure of markets. Here we looked at the interdependencies of individual behavior, market structure and market efficiency. The focus of our analysis was the question of how the technological developments in the information and communication technologies affect the functioning of markets. Our studies on the theory of two-sided markets, on merger control, and on competition policy received a lot of attention. In some studies we introduced experimental methods and behavioral models into the theory of industrial organization. The collaborative research center SFB/TR 15 did not only contribute substantially to the understanding of actual and optimal governance structures, it also significantly increased the international visibility of economic research in Germany. This was achieved not just by the many international publications (in particular those in the top 5 journals), but also through the many conferences and workshops that the SFB (co-)organized, our large visitors program, and the participation of many SFB members at high-profile international conferences. Finally, the collaborative research center SFB/TR 15 made a significant contribution to the training of young scientists. Up to now 75 former young members of the SFB made a successful academic career, among them 20 female scientists. Roughly half of them received a professorship in Germany, the other half is working as professors at foreign universities. Another 32 postdoctoral researchers are still in the “pipeline”.
Publications
- (2005): “Strategic Experimentation with Exponential Bandits,” Econometrica, 73: 39–68
Keller, Godfrey, Sven Rady, and Martin Cripps
(See online at https://doi.org/10.1111/j.1468-0262.2005.00564.x) - (2006): “Housing Market Dynamics: On the Contribution of Income Shocks and Credit Constraints,” Review of Economic Studies, 73: 459–85
Ortalo-Magné, Francois and Sven Rady
(See online at https://doi.org/10.1111/j.1467-937X.2006.383_1.x) - (2006): “On the Workings of a Cartel: Evidence from the Norwegian Cement Industry,” American Economic Review, 96: 321–38
Röller, Lars-Hendrik and Frode Steen
(See online at https://doi.org/10.1257/000282806776157713) - (2006): “The Limits of Ex Post Implementation,” Econometrica, 74: 585–610
Jehiel, Philippe, Moritz Meyer-ter-Vehn, Benny Moldovanu, and William R. Zame
(See online at https://doi.org/10.1111/j.1468-0262.2006.00675.x) - (2007): “Contests for Status,” Journal of Political Economy, 115: 338–63
Moldovanu, Benny, Aner Sela, and Xianwen Shi
(See online at https://doi.org/10.1086/518010) - (2007): “Contracting with Imperfect Commitment and Noisy Communication,” Journal of Economic Theory, 136: 236–59
Bester, Helmut and Roland Strausz
(See online at https://doi.org/10.1016/j.jet.2006.07.009) - (2007): “Fairness and Contract Design,” Econometrica, 75: 121–54
Fehr, Ernst, Alexander Klein, and Klaus M. Schmidt
(See online at https://doi.org/10.1111/j.1468-0262.2007.00734.x) - (2007): “Platform Ownership,” Journal of the European Economic Association, 5: 1130–60
Nocke, Volker, Martin Peitz, and Konrad Stahl
(See online at https://doi.org/10.1162/JEEA.2007.5.6.1130) - (2008): “Delegation and Incentives,” Rand Journal of Economics, 39: 664–82
Bester, Helmut and Daniel Krähmer
(See online at https://doi.org/10.1111/j.1756-2171.2008.00033.x) - (2008): “Power Inside the Firm and the Market: A General Equilibrium Approach,” Journal of the European Economic Association, 6: 752–88
Marin, Dalia and Thierry Verdier
(See online at https://doi.org/10.1162/JEEA.2008.6.4.752) - (2009): “Expectation Damages, Divisible Contracts, and Bilateral Investment,” American Economic Review, 99: 1608–18
Ohlendorf, Susanne
(See online at https://doi.org/10.1257/aer.99.4.1608) - (2009): “Learning about the Future and Dynamic Efficiency,” American Economic Review, 99: 1576–87
Gershkov, Alex and Benny Moldovanu
(See online at https://doi.org/10.1257/aer.99.4.1576) - (2009): “Multi-Battle Contests,” Games and Economic Behavior, 66: 256–74
Konrad, Kai A. and Dan Kovenock
(See online at https://doi.org/10.1016/j.geb.2008.05.002) - (2009): “Should You Allow Your Employee to Become Your Competitor? On Noncompete Agreements in Employment Contracts,” International Economic Review, 50: 117–41
Kräkel, Matthias and Dirk Sliwka
(See online at https://doi.org/10.1111/j.1468-2354.2008.00525.x) - (2009): “The Duration of Patent Examination at the European Patent Office,” Management Science, 55: 1969–84
Harhoff, Dietmar and Stefan Wagner
(See online at https://doi.org/10.1287/mnsc.1090.1069) - (2009): “The Theory of Assortative Matching Based on Costly Signals,” Review of Economic Studies, 76: 253–81
Hoppe, Heidrun, Benny Moldovanu, and Aner Sela
(See online at https://doi.org/10.1111/j.1467-937X.2008.00517.x) - (2010): “Dynamic Merger Review,” Journal of Political Economy, 118: 1201–51
Nocke, Volker and Michael D. Whinston
(See online at https://doi.org/10.1086/658161) - (2010): “Incentive Problems with Unidimensional Hidden Characteristics: A Unified Approach,” Econometrica, 78: 1201–37
Hellwig, Martin F.
(See online at https://doi.org/10.3982/ECTA7726) - (2010): “Strategic Communication Networks,” Review of Economic Studies, 77: 1072–99
Hagenbach, Jeanne and Frédéric Koessler
(See online at https://doi.org/10.1111/j.1467-937X.2009.591.x) - (2010): “The Design of Corporate Debt Structure and Bankruptcy,” Review of Financial Studies, 23: 2648–79
Thadden, Ernst-Ludwig von, Erik Berglöf, and Gérard Roland
(See online at https://doi.org/10.1093/rfs/hhq019) - (2010): “Who is Afraid of Political Risk? Multinational Firms and Their Choice of Capital Structure,” Journal of International Economics, 82: 208–18
Kesternich, Iris and Monika Schnitzer
(See online at https://doi.org/10.1016/j.jinteco.2010.07.005) - (2011): “Negatively Correlated Bandits,” Review of Economic Studies, 78: 693–732
Klein, Nicolas and Sven Rady
(See online at https://doi.org/10.1093/restud/rdq025) - (2011): “Optimal Procurement Contracts with Pre-Project Planning,” Review of Economic Studies, 78: 1015–41
Krähmer, Daniel and Roland Strausz
(See online at https://doi.org/10.1093/restud/rdq033) - (2011): “Prizes and Lemons: Procurement of Innovation under Imperfect Commitment,” Rand Journal of Economics, 42: 664–80
Ding, Wei and Elmar G. Wolfstetter
(See online at https://doi.org/10.1111/j.1756-2171.2011.00149.x) - (2011): “Reference Points and Effort Provision,” American Economic Review, 101: 470–92
Abeler, Johannes, Armin Falk, Lorenz Goette, and David Huffman
(See online at https://doi.org/10.1257/aer.101.2.470) - (2012): “Carrot or Stick? The Evolution of Reciprocal Preferences in a Haystack Model,” American Economic Review, 102: 914–40
Herold, Florian
(See online at https://doi.org/10.1257/aer.102.2.914) - (2012): “Repeated Moral Hazard and Contracts with Memory: A Laboratory Experiment,” Games and Economic Behavior, 75: 1000–08
Nieken, Petra and Patrick W. Schmitz
(See online at https://doi.org/10.1016/j.geb.2012.02.011) - (2012): “Screening, Competition, and Job Design: Economic Origins of Good Jobs,” American Economic Review, 102: 834–64
Bartling, Björn, Ernst Fehr, and Klaus M. Schmidt
(See online at https://doi.org/10.1257/aer.102.2.834) - (2013): The Bankers' New Clothes: What's Wrong with Banking and What to Do about It. Princeton: Princeton University Press, ISBN: 978-0-691-15684-2
Admati, Anat and Martin F. Hellwig
- (2013): “Financial Constraints and Innovation: Why Poor Countries Don't Catch Up,” Journal of the European Economic Association, 11: 1115–52
Gorodnichenko, Yuriy and Monika Schnitzer
(See online at https://doi.org/10.1111/jeea.12033) - (2013): “Merger Policy with Merger Choice,” American Economic Review, 103: 1006–33
Nocke, Volker and Michael D. Whinston
(See online at https://doi.org/10.1257/aer.103.2.1006) - (2013): “On the Equivalence of Bayesian and Dominant Strategy Implementation,” Econometrica, 81: 197–220
Gershkov, Alex, Jacob K. Goeree, Alexey Kushnir, Benny Moldovanu, and Xianwen Shi
(See online at https://doi.org/10.3982/ECTA10592) - (2014), “Competition under Consumer Loss Aversion,” RAND Journal of Economics, 45: 1–31
Karle, Heiko and Martin Peitz
(See online at https://doi.org/10.1111/1756-2171.12040) - (2014): “Mechanism Design by an Informed Principal: Private Values with Transferable Utility,” Review of Economic Studies, 81: 1668–707
Mylovanov, Tymofiy and Thomas Tröger
(See online at https://doi.org/10.1093/restud/rdu019) - (2014): “Repo Runs,” Review of Financial Studies, 27: 957–89
Martin, Antoine, David Skeie, and Ernst-Ludwig von Thadden
(See online at https://dx.doi.org/10.2139/ssrn.1594895) - (2015): Spieltheorie und Schuldrecht: Mohr Siebeck, ISBN-13: 978-316152261
Schweizer, Urs
(See online at https://doi.org/10.1628/978-3-16-153761-5) - (2015): “Conflict Resolution, Public Goods and Patent Thickets,” Management Science
Harhoff, Dietmar, Georg v. Graevenitz, and Stefan Wagner
(See online at https://doi.org/10.1287/mnsc.2015.2152) - (2015): “Loss Aversion and Inefficient Renegotiation,” Review of Economic Studies, 82: 297–332
Herweg, Fabian and Klaus M. Schmidt
(See online at https://doi.org/10.1093/restud/rdu034) - (2015): “Market Transparency, Adverse Selection and Moral Hazard in Online Markets,” Journal of Political Economy
Klein, Tobias J., Christian Lambertz, and Konrad Stahl
(See online at https://doi.org/10.1086/688875) - (2015): “Optimal Sales Contracts with Withdrawal Rights,” Review of Economic Studies, 82: 762–90
Krähmer, Daniel and Roland Strausz
(See online at https://doi.org/10.1093/restud/rdv003)
