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Research projects

Research at ESMT Berlin continues to attract grants from various funding sources. Current grants are listed below.

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Deutsche Forschungsgemeinschaft (DFG)

Deutsche Forschungsgemeinschaft (DFG)

Collaborative Research Center TRR 190

"Rationality and Competition: The Economic Performance of Individuals and Firms"

ESMT faculty:

Rajshi Jayaraman (ESMT Berlin) in cooperation with Florian Englmaier (LMU München)
Cooperating Institutions:

Ludwig-Maximilians-Universität München (project lead), Humboldt University Berlin, Deutsches Institut für Wirtschaft, ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München e.V, Max Planck Intitute for Innovation and Competition, Technical University Berlin, Wissenschaftszentrum Berlin

Sub-project title:Incentive design in the presence of social preferences
Funding:Sonderforschungsbereich/Transregio

The project by Englmaier and Jayaraman focuses on the human resource management practices in firms. A firm’s ability to compete effectively on product markets depends crucially on its success in attracting, retaining, and motivating productive workers in competitive labor markets. Standard economic models focus on the design of incentive mechanisms that are based on monetary rewards. While these are clearly important, the standard model has, until relatively recently, failed to incorporate the presence of social preferences of workers, including fairness, reciprocity, identity and peer effects in the workplace. The project will examine the effects of diverse human resource management (HRM) practices - such as incentive pay, screening for traits, or team based work organization - on worker productivity, and thereby firm competitiveness, while accounting for the possibility that workers are motivated not only by financial considerations but also by social preferences.

Research grant

Applicants:

Jörg Rocholl (ESMT Berlin), Tobias Berg (University of Bonn)
Project title:The role of incentives within banks
Funding:Research grant

Short-term, volume-based incentives for bank employees have been blamed for excessive risk-taking and the recent financial crisis. Consequently, regulation of compensation schemes has been one of the pillars of the regulatory reforms in the financial sector. The goal of our project is to establish empirically the link between loan officer incentives and loan default rates. How should incentives and the loan granting process be designed to minimize risks? Based on a novel and proprietary dataset by a major private bank, we want to examine the following three research questions: 1.) How do loan officers react to volume-based incentives when loan decisions are taken based on hard information only? In particular, to what extent are loan officers willing to manipulate even hard information if truthful reporting is incompatible with their personal incentives? 2.) How do loan officers react to a change in incentive structures from a system that rewards/punishes ex-post performance to a pure volume-based incentive system? 3.) If loan officers are volume-incentivized - as is the case at most banks worldwide - does the involvement of risk management in the loan granting process ("4-eyes-principle") lead to better decision making?

 

Research grant

Applicants:

Frank Hüttner (ESMT Berlin)
Project title:Solidarity, monotonicity, and externalities in cooperative game theory
Funding:Research grant

Recently, two issues attracted a lot of attention in the literature on cooperative game theory. First, the reconciliation of solidarity and performance orientation and, second, the incorporation of externalities. Our project connects to both lines of research and strives for combining insights from both parts of the literature. The Shapley value probably is the most important single-valued solution concept in cooperative game theory. The Shapley value is strictly performance-oriented and disregards externalities. There exist several solutions that generalize the Shapley value and take into account aspects of solidarity. Characterizations (axiomatizations) allow for a better judgement on the plausibility of these solutions. Similarly, there exist several generalizations of the Shapley value for cooperative games with externalities. Characterizations allow for a better judgement on these generalizations. The existing generalizations are based on the assumption that a solution should satisfy linearity. DeClippel and Serrano (2008, ECTA), however, argue that this is a rather mathematical assumption, which is not too compelling. Ever since Young (1985, IJGT) showed that the Shapley value can be characterized without linearity, researchers tried to do without the assumption of linearity. Casajus and Huettner (2014, JET) succeed to provide a characterization without linearity for solidary solutions. In this project, we aim to make use of these insights when dealing with externalities. We aim for a characterization of established solutions for cooperative games with externalities that do not rely on the linearity axiom. Moreover, we look for further foundations of known solution concepts. We will also study solution concepts that reflect the notion of solidarity in the case of externalities. Further, the formation of stable groups shall be studied in the context of externalities. Finally, new structural insights shall be gained by adapting recent results on cooperative games without externalities.

Innovation Growth Lab (IGL) / Nesta

Innovation Growth Lab (IGL) / Nesta

IGL Grants Programme

Project title:A randomized control trial of endogenous team formation and topic choice among potential entrepreneurs
ESMT faculty:Linus Dahlander, Rajshri Jayaraman
Cooperating institutions:Technische Universität Hamburg
Funding:IGL Grants Programme

We investigate what makes teams effective in early-stage entrepreneurship—their composition, or the topics they explore. We implement a large-scale field experiment in a German university, whose students are required to take an introductory entrepreneurship class. At the end of this class, equal- sized teams of students must submit a business plan. The first treatment dimension in our two-by- two experimental design pertains to team composition: students are randomly assigned to either endogenous choice of or exogenous assignment to team members. The second treatment dimension applies to topic selection: students will either be allowed to select a topic of their choice or be pre- assigned to a topic. The outcome of interest will be performance on this business plan exercise and changes in entrepreneurial self-efficacy. Randomization will permit us to causally identify if successful team performance rests on choosing ideas versus team members.

Leibniz Association

Leibniz Association

 

Peter Curtius-Stiftung

Peter Curtius-Stiftung

The Peter Curtius-Stiftung (Peter Curtius Foundation) has a long-standing cooperation with ESMT Berlin to grant funding for various projects. The Foundation was created in 1989 by Wolfgang and Marie-Luise Curtius in memory of their son Peter. The focus of the Foundation is to sponsor research and education mainly in the area of organizational behavior and leadership.

Since 2005, the Peter Curtius Foundation has generously supported more than 19 projects with a total funding volume of roughly €400,000.  

Ongoing grants

2016

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A randomized control trial of endogenous team formation and topic choice among potential entrepreneurs

Linus Dahlander and Rajshri Jayaraman

Abstract:

Our proposal seeks to study the effect of endogenous team formation and topic choice on team performance in early-stage entrepreneurship using a randomized control trial. While extant entrepreneurship research discusses the relationship between team composition and outcomes, this research treats venture teams as given and fails to establish a causal link between the two. This is due to non-experimental settings, but also due to not investigating team formation processes and their subsequent effects. There is an implicit assumption that accelerators, incubators, science parks and other organizational arrangements are an effective way to help prospective entrepreneurs to find new collaborators in a systematic manner. Yet, without a clear understanding of what it is about these arrangements that enable teams to function effectively, it is impossible to make recommendations regarding “what works”. Are teams successful because of who is in them? Or are they successful because of what they do?

2015

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Central bank interventions and short-term liquidity provision

Sascha Steffen

Abstract:

Since the start of the sovereign debt crisis in late 2009, the ECB intervened substantially using unconventional policy measures. These interventions, however, did not have a positive effect on the real sector. In this paper, we investigate private short-term funding of European banks during the sovereign debt crisis studying new regulatory data of the investment of U.S. money market mutual funds (MMF). Did some funds still increase risk taking, funding high-risk banks, while credit spreads already widened at the beginning of 2011? How did MMF run on banks when the sovereign crisis deepened after June 2011? Importantly, how did central bank interventions affect risk taking by MMF in European banks? Answers to these questions are of high political relevance as they provide novel evidence related to spillover effects of the monetary policy of the ECB, which might eventually destabilize European banks even further.

To see previous grants, please visit our archive!

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