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The Road to Efficient Liberalization of EU Energy Markets: Obstacles and Consequences
Mravec, Michal ; Ortmann, Andreas (advisor) ; Kmenta, Jan (referee) ; Roland, Gérard (referee)
1 Understanding the Lack of Competition in Natural Gas Markets: The Impact of Limited Upstream Competition Motivated by the slow emergence of competition after the natural gas market in the Czech Republic was liberalized, I explore the impact of upstream competition on the downstream level. I extend standard Cournot models to understand current and likely future developments, paying particular attention to the impact of market liberalization on a country characterized by a lack of domestic production and limited foreign upstream competition. I show that the upstream producer might exercise his market power to capture some of the benefits of liberalization and increase the wholesale price, which hinders the desired decline of the end-user price in the long run. This pricing change in turn makes the entry of new players in the transition period more difficult. This problem might be mitigated or even completely reversed if upstream competition develops simultaneously with downstream liberalization. What Role Does Storage Play in the Liberalization of the Natural Gas Market? Focusing on the liberalization of the natural gas market in the Czech Republic, in this paper I explore the impact of the structure of natural gas storage on the development of competition and prices after market liberalization. I...
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Essays on Decision Making Under Uncertainty
Prokosheva, Alexandra ; Ortmann, Andreas (advisor) ; Trautmann, Stefan (referee) ; Weitzel, Utz (referee)
This thesis examines several aspects of decision making under uncertainty. In the first chapter, coauthored with Ondrej Rydval, Andreas Ortmann, and Ralph Hertwig, we replicate three pricing tasks of Gneezy, List, and Wu (2006) for which they document the so-called uncertainty effect, namely, that people value a binary lottery over non-monetary outcomes less than other people value the lottery's worse outcome. While the authors implemented a verbal lottery description, we use a physical lottery format, which makes misinterpretation of the lottery structure highly unlikely. We also provide subjects with complete information about the goods they are to value (book gift certificates and one-year deferred payments). Contrary to Gneezy, List, and Wu (2006), we observe for all three pricing tasks that subjects' willingness to pay for the lottery is significantly higher than other subjects' willingness to pay for the lottery's worse outcome. In the second chapter, I investigate the relationship between attitudes towards ambiguity and the ability to reduce compound risks. The evidence from an experiment on adolescents shows that patterns identified in the previous literature are susceptible to experimental implementation and the characteristics of the subjects. Cognitive skills and the way...
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Overconfidence in Business, Economics, Finance, and Psychology: How much of a Problem is it?
Krajč, Marian ; Ortmann, Andreas (advisor) ; Hoelzl, Erik (referee) ; Fellner, Gerlinde (referee)
The first chapter offers a theoretical model that suggests an alternative explanation to the so-called unskilled-and-unaware problem-the unskilled overestimate their skills while the skilled underestimate (but less than the unskilled). The unskilled-and-unaware problem was experimentally identified about a decade ago and numerous authors have elaborated on this problem since. We propose that the alleged unskilled-and-unaware problem, rather than being one of biased judgments, is a signal extraction problem that differs for the skilled and the unskilled. The model is based on two assumptions. First, we assume that skills are distributed according to a J-distribution, which can be regarded as an approximation of the very right tail of the IQ distribution. This assumption is reasonable given the typical subject pool used in the experimental studies of overconfidence - students from prominent US universities. Second, we assume an error term in own-ability perception, which is a common assumption in psychology models. Our simple model generates, by means of analytical computations, patterns similar to those identified in the previous experimental literature. We also discuss conditions under which the unskilled-and-unaware problem should disappear. The second chapter reports the results of three experiments (one...
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Anti-Corruption Mechanism in Economic Models of Corruption
Krajčová, Jana ; Ortmann, Andreas (advisor) ; Frank, Bjorn (referee) ; Spagnolo, Giancarlo (referee)
This dissertation consists of three chapters that, theoretically and experimentally, address the effectiveness of anti-corruption mechanisms. In the first chapter, I analyze the effects of monitoring on an agent's incentives in a two-period principal-agent model in which the agent decides on his effort and corruptibility. The agent's type and strategy are unknown to the principal. I compare incentive-compatible wages under three different scenarios: 1) the principal does not monitor and only observes output; 2) the principal monitors the agent's effort choice; and 3) the principal monitors the agent's corruptibility. I find that monitoring of effort improves the sorting of types but it might also give the agent more incentive to be corrupt. Monitoring of corruption does not improve the sorting of types but it negatively affects the agent's incentive to be corrupt. In the second and in the third chapter I analyze experimentally how promising as anti-corruption measures leniency policies really are. Buccirossi and Spagnolo (2006) had conjectured, based on theoretical work, that ill-designed legal environments might, in fact, produce results that contradict the intentions of the designers of the leniency policies. And, indeed, I demonstrate, for the first time as far as I know, that real-world subjects...
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Experiments in Corruptibility
Momotenko, Iryna ; Ortmann, Andreas (advisor) ; Frank, Björn (referee) ; Abbink, Klaus (referee)
vii Abstract This thesis theoretically, but mostly experimentally, investigates corruptibility and ways to fight corruption. In the first chapter, I investigate if an individual is more likely to behave corruptly if she believes that the majority of his/her peers are behaving in a similar manner. I also study what motivates an individual to follow the behavior of others more: knowing that the majority behaves corruptly or the willingness to fulfill the expectations of one's peers. I use a one-shot reverse public goods experiment to provide answers to these questions. The results suggest the existence of a peer effect of corrupt behavior. Expectations of the number of corrupt peers are found to be the main source of subjects' anti-social behavior. In the second chapter, I question the rationale behind previous research results on the relationship between officials' wages and the level of corruption. In the light of counterintuitive empirical findings by Schulze et al. (2016) and Chen and Liu (2018), I investigate the wages- corruption relationship by means of a laboratory experiment, using a robust version of a bribery game with four different relative wages for public officials. I also introduce a new method of assigning different wages to participants, which helps to reduce self-selection based on ability,...
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Essays in Experimental Economics
Miklánek, Tomáš ; Katuščák, Peter (advisor) ; Servátka, Maroš (referee) ; Ortmann, Andreas (referee)
Essays in Experimental Economics Tomáš Miklánek Abstract The first chapter introduces a theoretical model of inequality aversion which can also be used in an environment with information asymmetries. The model is based on the non-paternalistic approach where, the own utility function incorporates the utility of other people as perceived by a decision maker. Moreover it allows extensions for other motives which may result in pro-social behavior. I extend the model by adding shame aversion as an additional driver for apparently altruistic behavior. Threat of shame is induced by different levels of exposure of either own actions or identity to the third party observers. I also experimentally test predictions of the model using a very simple environment of a dictator's game. The experimental design aims to remove additional confounding behavioral effects present in the previous literature. The results suggest that even a very small exposure results in significantly higher amounts sent to recipients. The analysis also shows that the agents, who believe that they can conceal their own actions in front of the less informed counterpart, exploit this information asymmetry for their monetary benefit. The second chapter examines endogenous decisions to acquire useful information. My experimental design tries to test...
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Essays on Fairness, Inequality, and Uncertainty
Babický, Vítězslav ; Ortmann, Andreas (advisor) ; Katuščák, Peter (referee) ; Servátka, Maroš (referee)
Chapter I. Recent theories of fairness (e.g., Bolton & Ockenfels, 2000; Fehr & Schmidt, 1999) have typically used the assumption of ex ante known pie size. Here I explore theoretically the ramifications of pie size being unknown ex ante. Using a simple allocation problem known as dictator game, I find that attitude to fairness is systematically and intuitively related to risk and risk attitude. Results from informal experiments support the model proposed here. Chapter II. The relationship between risk in the environment, risk aversion and inequality aversion is not well understood. Theories of fairness have typically assumed that pie sizes are known ex-ante. Pie sizes are, however, rarely known ex ante. Using two simple allocation problems - the Dictator and Ultimatum games - we explore whether, and exactly how, unknown pie sizes with varying degrees of risk ("endowment risk") influence individual behavior. We derive theoretical predictions for these games using utility functions that capture additively separable constant relative risk aversion and inequality aversion. We experimentally test the theoretical predictions using two subject pools: students at Czech Technical University and employees of Prague City Hall. We find that: (1) Those who are more risk-averse are also more inequality-averse in...
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Essays on Decision Making Under Uncertainty
Prokosheva, Alexandra ; Ortmann, Andreas (advisor) ; Trautmann, Stefan (referee) ; Weitzel, Utz (referee)
This thesis examines several aspects of decision making under uncertainty. In the first chapter, coauthored with Ondrej Rydval, Andreas Ortmann, and Ralph Hertwig, we replicate three pricing tasks of Gneezy, List, and Wu (2006) for which they document the so-called uncertainty effect, namely, that people value a binary lottery over non-monetary outcomes less than other people value the lottery's worse outcome. While the authors implemented a verbal lottery description, we use a physical lottery format, which makes misinterpretation of the lottery structure highly unlikely. We also provide subjects with complete information about the goods they are to value (book gift certificates and one-year deferred payments). Contrary to Gneezy, List, and Wu (2006), we observe for all three pricing tasks that subjects' willingness to pay for the lottery is significantly higher than other subjects' willingness to pay for the lottery's worse outcome. In the second chapter, I investigate the relationship between attitudes towards ambiguity and the ability to reduce compound risks. The evidence from an experiment on adolescents shows that patterns identified in the previous literature are susceptible to experimental implementation and the characteristics of the subjects. Cognitive skills and the way...
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