Kiel Institute for the World Economy

About: Kiel Institute for the World Economy is a facility organization based out in Kiel, Germany. It is known for research contribution in the topics: Foreign direct investment & Productivity. The organization has 318 authors who have published 1909 publications receiving 42832 citations. The organization is also known as: Institut für Weltwirtschaft an der Universität Kiel.

Exposure to COVID-19 is associated with increased altruism, particularly at the local level.

Abstract: Theory posits that situations of existential threat will enhance prosociality in general and particularly toward others perceived as belonging to the same group as the individual (parochial altruism). Yet, the global character of the COVID-19 pandemic may blur boundaries between ingroups and outgroups and engage altruism at a broader level. In an online experiment, participants from the U.S. and Italy chose whether to allocate a monetary bonus to a charity active in COVID-19 relief efforts at the local, national, or international level. The purpose was to address two important questions about charitable giving in this context: first, what influences the propensity to give, and second, how is charitable giving distributed across different levels of collective welfare? We found that personal exposure to COVID-19 increased donations relative to those not exposed, even as levels of environmental exposure (numbers of cases locally) had no effect. With respect to targets of giving, we found that donors predominantly benefitted the local level; donations toward country and world levels were half as large. Social identity was found to influence charity choice in both countries, although an experimental manipulation of identity salience did not have any direct effect.

Synergies and trade-offs between nature conservation and climate policy: Insights from the “Natural Capital Germany – TEEB DE” study

Abstract: Ecosystem-based approaches provide opportunities for climate policy to reduce greenhouse gas (GHG) emissions, to expand the adaptive capacities and resilience of land systems to a changing climate, and to simultaneously protect biodiversity and ecosystems services (ESS). However, knowledge about the economic benefits and cost-efficiency of ecosystem-based approaches is still limited. The objective of this paper is to enhance understanding of synergies and trade-offs between climate policy related measures and nature conservation and how ecosystem-based approaches can contribute to both climate as well as biodiversity and ESS conservation goals, through overall economic analyses to inform balanced decision making. The paper builds upon the current state of knowledge as brought together by contributors to the German national TEEB-study “Natural Capital and Climate Policy – Synergies and Conflicts”. We present options and lessons learned from major land-use sectors of high relevance for ecosystem-based approaches to climate change, namely agriculture, peatlands, forests, wetlands and coastal and marine ecosystems. Based on these assessments, we argue that successful implementation of an ecosystem-based climate policy requires effective coordination and coherence between sectors and their respective policies, for example agriculture, forestry and energy. We identify specific targets for an ecosystem-based climate policy and options for achieving this coherent implementation.

Testing transitivity in choice under risk

Abstract: Recently proposed models of risky choice imply systematic violations of transitivity of preference. This study explored whether people show the predicted intransitivity of the two models proposed to account for the certainty effect in Allais paradoxes. In order to distinguish “true” violations from those produced by “error,” a model was fit in which each choice can have a different error rate and each person can have a different pattern of preferences that need not be transitive. Error rate for a choice is estimated from preference reversals between repeated presentations of the same choice. Results showed that few people repeated intransitive patterns. We can retain the hypothesis that all participants were transitive.

Tail dependence between gold and sectorial stocks in China: perspectives for portfolio diversification

Abstract: This article analyzes the relationship between gold quoted on the Shanghai Gold Exchange and Chinese sectorial stocks from 2009 to 2015. Using different copulas, our results show that there is weak but significant tail dependence between gold and Chinese sectorial stock returns. This means that the dependence between extreme movements of the two assets is not pronounced and confirms the role of gold as a safe haven asset. Based on analyzing the efficient frontier, CCC-GARCH optimal weights, hedge ratios and hedging effectiveness, we further show that adding gold into Chinese stock portfolios can help to reduce their risk. Gold appears to be the most efficient diversifier for stocks of the materials sector and the less efficient for the utilities sector. As a robustness check, we also compare gold to oil and indicate that gold is more efficient than oil in the diversification of Chinese stock portfolios.

Heterogeneous Motives in the Trust Game: A Tale of Two Roles.

Abstract: Trustful and trustworthy behaviors have important externalities for the society. But what exactly drives people to behave in a trustful and trustworthy manner? Building on research suggesting that individuals' social preferences might be a common factor informing both behaviors, we study the impact of a set of different motives on individuals' choices in a dual-role Trust Game (TG). We employ data from a large-scale representative experiment (N = 774), where all subjects played both roles of a binary TG with real monetary incentives. Subjects' social motives were inferred using their decisions in a Dictator Game and a dual-role Ultimatum Game. Next to self-interest and strategic motives we consider preferences for altruism, spitefulness, egalitarianism, and efficiency. We demonstrate that there exists considerable heterogeneity in motives in the TG. Most importantly, among individuals who choose to trust as trustors, social motives can differ dramatically as there is a non-negligible proportion of them who seem to act out of (strategic) self-interest whereas others are driven more by efficiency considerations. Subjects' elicited trustworthiness, however, can be used to infer such motivations: while the former are not trustworthy as trustees, the latter are. We discuss that research on trust can benefit from adding the second player's choice in TG designs.