Gerald Eisenkopf

Mediation and Conflict Prevention

Mediation is a popular process to prevent conflicts over common resources, but there is little clean insight into its effectiveness and mechanisms. Our experimental approach allows for a comprehensive analysis of third-party intervention into potential conflicts and circumvents key problems linked to the analysis of field data. A mediator who credibly threatens punishment in the case of uncooperative behavior achieves the efficient solution in most cases. Similar results are obtained even if the mediator is biased toward one party or has no incentive to intervene. When cooperation fails, communication without credible punishment threats leads to particularly low payouts for the “losing” party.

Learning and Peer Effects

Peer effects are possibly very important for educational performance but hard to identify. This paper confirms the existence of peer effects in a learning process with data from an experiment. The experimental approach circumvents key econometric problems which greatly restrict the analysis of educational peer effects with administrative or survey data. The experimental setting offers some insight into the mechanisms of peer interaction. The results show that prospective cooperation has a motivational effect. There is no evidence with respect to an optimal group composition. The benefit from the pair treatment is largely independent of the characteristics of the partner.

Negative Weights for Performance Measures

ABSTRACT Quantitative performance measurement is a controversial idea in the public sector. This paper argues that management by measurement is sensible if the measurement methods have a sufficient quality. In particular, quantitative performance measures have to address problems of gaming and monitoring intensity. I look at the assignment of negative weights to poor, but informative, performance measures even if these measures have a positive correlation with the non-contractible performance objective. In a simple agency relationship, I show how a poor measure with negative weight can serve as an indicator for manipulation. However, the benefits derived from a negative weight may come at the price of increased measurement risk. Healthcare and research organizations provide examples of how negative weights can improve performance measurement.

Paying for better test scores

The paper investigates if the provision of financial incentives has an impact on the performance of students in educational tests. The analysis is based on data from an experiment with high school students who answered multiple-choice items from the Third International Mathematics and Science Study (TIMSS). As in TIMSS, the setup did not discourage students from guessing. Students with a salary based on individual performance did not score significantly better than students with a fixed payout or a payout based on the performance of the entire group. However, incentives have an impact. The group with individualized payments showed significantly more guessing activities than the others.

Student Selection and Incentives

The paper discusses the impact of performance based selection in secondary education on student incentives. The theoretical approach combines human capital theory with signaling theory. The consideration of signaling offers an explanation for observed performance of educational systems with a standard peer effect argument. More specifically it can be optimal to select students according to ability even if selective systems do not outperform comprehensive systems in tests. Selection achieves the same output with lower private costs for the students. The paper questions the strong focus on educational tests to measure the efficiency of selective systems as long as these tests provide no information about a student’s incentives and private costs.

Punishment Motives for Small and Big Lies

Corporate fraud typically involves deceptive financial statements that are harmful for some stakeholders. We analyze how preferences for honesty and economic fairness shape the punishment of such untruthful statements. Our laboratory experiment disentangles the crucial confound that, for deceptive financial statements, larger deviations from the truth imply both a stronger violation of the honesty norm and an increase in economic harm. Our study measures how people punish increased dishonesty controlling for the corresponding economic harm. We find that punishment increases with the size of the lie. This behavioral pattern is driven by people who are honest themselves. Our results suggest that popular demand for punitive measures in case of financial scandals reflects a genuine interest in the enforcement of social norms.

Unequal Incentives and Perceived Fairness in Groups

Incentives shape how much people contribute to the welfare of a group. These incentives do not restrict the opportunities but they change the costs of contributions. This paper studies how the random assignment of such incentives affects perceived distributive justice among group members. Do people consider differences in incentives similar to unequal opportunities, that is, situations in which some people have a lower chance to make a high contribution? The results from a real effort experiment show that the economic framing of incentives matters in this context. If some people do not work for the common good because of rather large private costs, they appreciate these ‘negative incentives’ similarly to unequal opportunities. They do not do so, and become less egalitarian, if lower effort for the group increases the chance for private gains (‘positive incentives’). Interestingly, participants reward group members who do not limit their expected contributions to the group despite adverse incentives.

Randomized controlled trial of teaching methods : do classroom experiments improve economic education in high schools?

ABSTRACT The authors present results from a comprehensive field experiment at Swiss high schools in which they compare the effectiveness of teaching methods in economics. They randomly assigned classes into an experimental and a conventional teaching group, or a control group that received no specific instruction. Both teaching treatments improve economic understanding considerably, while effect sizes between teaching treatments are almost identical. However, preexisting economic competencies crucially affect learning outcomes as more competent students seem to benefit disproportionately from classroom experiments, while weaker students lose out. Supplemental data indicate that the experimental treatment crowded out time for adequately discussing the subject, which may have limited less competent students to generate a profound understanding.

Deterring Gaming With Imperfect Evaluation Methods

This paper introduces and discusses an idea which minimizes gaming or manipulation activities, if payments are linked to results from manipulative methods. The idea is to add nonmanipulable information to manipulable information to improve the evaluation of a given output. A score declining in increasing evaluation quality indicates gaming and allows to estimate the true result. A simple linear incentive scheme is introduced in which a high evaluation score is rewarded. The introduced mechanism dominates any single evaluation method. However, limited liability restricts its applicability. If agents are risk-averse, the principal should let each agent decide, which evaluation method he prefers.

Deregulation and Customer Relationship in Higher Education

This paper analyzes the impact of deregulation policies in higher education on requirements for student input. Requirements decline if universities can choose the level of tuition fees (autonomous fees). If regulations keep tuition fees artificially low (regulated fees) or allow low ability students into higher education, universities increase requirements to deter undesired students. In a duopoly with regulated fees two ex-ante identical universities have identical requirements. Autonomous fee setting induces product differentiation. One university chooses high requirements and low tuition fees, the competitor low requirements and high fees. The paper provides explanations for price-cost ratios in American universities, the differences in the industrial organization of higher education in the US and Europe respectively and the existence of profitable private universities with relatively low academic standards.