EconStor Community: Bamberg Economic Research Group, Bamberg University
https://hdl.handle.net/10419/160
Bamberg Economic Research Group, Bamberg University2024-03-28T18:22:29ZVertical product differentiation, prominence, and costly search
https://hdl.handle.net/10419/283000
Title: Vertical product differentiation, prominence, and costly search
Authors: Rozzi, Roberto; Schmitt, Stefanie Y.
Abstract: In many markets, firms offering low-quality goods are more prominent than firms offering high-quality goods. Then, consumers are perfectly informed about the good of the prominent low-quality firm but incur search costs to bring the high-quality good of a competitor to mind. We analyze under which circumstances the less-prominent firm has an incentive to invest in high quality. We investigate two scenarios: (i) homogeneous and (ii) heterogeneous search costs. If search costs are homogeneous, the less-prominent firm produces highquality goods for sufficiently low search costs, and an increase in search costs reduces the range of values for which the less-prominent firm invests in high quality. In contrast, if search costs are heterogeneous, the less-prominent firm produces high-quality goods for sufficiently high search cost heterogeneity, and an increase in average search costs expands the range of values for which the less-prominent firm invests in high quality.2024-01-01T00:00:00ZSocial segregation, misperceptions, and emergent cyclical choice patterns
https://hdl.handle.net/10419/273387
Title: Social segregation, misperceptions, and emergent cyclical choice patterns
Authors: Mayerhoffer, Daniel; Schulz-Gebhard, Jan
Abstract: This paper examines the puzzle of why economic inequality has not resulted in political countermeasures to mitigate it, and proposes that the reason is due to misperceptions of economic inequality caused by segregation in social networks. We model taxation and voting behavior with an exponential income distribution and a Random Geometric Graph-type model to represent homophily, which leads to people perceiving their own income rank and income to be close to the middle. We find that people base their beliefs about mean income on a compound of the true mean and their local perception in the network, and that higher homophily causes lower implemented tax rates, which explains why redistribution preferences appear decoupled from actual inequality. In a dynamic extension, we also demonstrate that a rich set of dynamic behaviours can emerge from rational updating beliefs about efficiency. Misperceptions not only decrease redistribution in a static setting, they also hinder agents from adapting and learning towards the unbiased tax rate in a dynamic sense. As policy implications, we suggest two measures to counteract this: educating people about the actual income distribution and promoting diversity to reduce homophily.2023-01-01T00:00:00ZExplaining the stylized facts of foreign exchange markets with a simple agent-based version of Paul de Grauwe's chaotic exchange rate model
https://hdl.handle.net/10419/279554
Title: Explaining the stylized facts of foreign exchange markets with a simple agent-based version of Paul de Grauwe's chaotic exchange rate model
Authors: Mignot, Sarah; Westerhoff, Frank H.
Abstract: We propose a simple agent-based version of Paul de Grauwe's chaotic exchange rate model. In particular, we assume that each speculator follows his own technical and fundamental trading rule. Moreover, a speculator's choice between these two trading philosophies depends on his individual assessment of current market circumstances. Our agent-based model setup is able to explain a number of important stylized facts of foreign exchange markets, including bubbles and crashes, excess volatility, fat-tailed return distributions, serially uncorrelated returns and volatility clustering. A stability and bifurcation analysis of its deterministic skeleton provides us with useful insights that foster our understanding of exchange rate dynamics.2023-01-01T00:00:00ZThe impact of macroeconomic activity and yield valuation on mergers and acquisitions in Europe
https://hdl.handle.net/10419/273385
Title: The impact of macroeconomic activity and yield valuation on mergers and acquisitions in Europe
Authors: Röhrer, Fabio E.G.; Proano, Christian R.; Mateane, Lebogang
Abstract: We examine the macroeconomic determinants of mergers and acquisitions (M&A) using panel data over 2006:Q1 - 2022:Q2 for 21 European Union (EU) countries. Across di§erent model specifications we find that bond yields and past real GDP growth are robust quantitatively and statistically significant determinants of M&A even after controlling for inflation and short-term global financial uncertainty. Additionally, we investigate the effect of the earnings before interest, taxes, depreciation and amortization multiple as an additional explanatory variable. A crucial novelty of our study is that bond yields reduce M&A activity because other investors are shifting their portfolios out of bonds and into riskier assets such as equities. We denote this as a "perverse valuation effect" making M&A more expensive. This interpretation and channel is unique to our study.2023-01-01T00:00:00Z