https://hdl.handle.net/10419/104069 University of Munich, Department of Economics 2026-09-14T01:51:52Z https://hdl.handle.net/10419/274067 Title: Estimating time-varying coefficients with Gretl using the VC method Authors: Schlicht, Ekkehart Abstract: This paper documents the function and use of the Gretl function package VCwrapper.pdf that implements the VC method for estimating time-varying coefficients in linear models as described in Schlicht (2021). It builds on the VCC program by Schlicht (2021a), is easy to use and highly configurable. It runs under Windows and Linux. 2022-01-01T00:00:00Z https://hdl.handle.net/10419/247358 Title: Loss aversion, moral hazard, and stochastic contracts Authors: Ho, Hoa Abstract: I examine whether stochastic contracts benefit the principal in the setting of moral hazard and loss aversion. Incorporating that the agent is expectation-based loss averse and allowing the principal to add noise to performance signals, I find that stochastic contracts reduce the principal's implementation cost in comparison with deterministic contracts. Surprisingly, if performance signals are highly informative about the agent's action, stochastic contracts strictly dominate the optimal deterministic contract for almost any degree of loss aversion. The optimal stochastic contract pays a high wage whenever the principal observes good performance signals, while upon observing bad performance signals it adds a lottery that gives either the high wage or a low wage that serves as a harsh penalty to the agent. In the general case when the agent is both risk and loss averse, I show that if a penalty wage (i.e., a wage level at which the agent feels a substantial disutility) exists, the first best can be approximated closely but not attained. The findings have an important implication for designing contracts for loss-averse agents: the principal should insure the agent against wage uncertainty by employing stochastic contracts that increase the probability of a high wage. 2021-01-01T00:00:00Z https://hdl.handle.net/10419/247359 Title: Aestheticism in the theory of custom Authors: Schlicht, Ekkehart Abstract: The nature of learning processes as well as evolutionary considerations suggest that aesthetic judgement is of central importance in the formation of custom. Learning and extrapolation rely on evaluations of non-instrumental features like simplicity, analogy, straightforwardness, and clarity. Further, learning is particularly effective if it is driven by an active desire to uncover new regularities, rather than merely gathering information in a passive way.From an evolutionary perspective, learning has evolved as an adaptation to fast and transitory environmental changes which cannot be effectively traced by the slow and long-term evolutionary processes which take place on the genetic level. The evolutionary raison d'être of learning is to enable the individual to incessantly search for upcoming new regularities, and to act appropriately on them. As learning depends on aesthetic judgement, the evolutionary selection for learning implies an evolutionary molding of an aesthetic sense, and a preference for patterns and patterned action which ultimately leads to the formation of custom and social learning. The paper presents, thus, an evolutionary underpinning for the behavioral tendencies underlying my theory of custom. 2021-01-01T00:00:00Z https://hdl.handle.net/10419/247360 Title: Patterned variation: The role of psychological dispositions in social and institutional evolution Authors: Schlicht, Ekkehart Abstract: The new institutional economics has one of its roots in evolutionary thinking. The idea is that there is competition among organizational forms. Some forms spread faster than others and thereby displace and eventually destroy the less well adapted forms. In the end, the most 'efficient' organizational formation will survive, where 'efficiency' is a social analogue for biological fitness. The process is predominately envisaged as a process of what I am going to term 'blind evolution': a combination of random variation and selection. The idea of randomness is put into question. If evolution is is to be able to work successfully on complex organisms or organizations, it is necessary that variation occurs in a patterned fashion with systematically correlated changes. Once the importance of patterned variation is established, it must be asked where the patterns come from. It will be argued that, for the purpose of the social sciences, these patterns are generated by psychological regularities, both cognitive and emotional. Features of patterning are discussed. 2021-01-01T00:00:00Z