The core of the graduate program is training in EBE methods, but these methods are not taught as an end in itself: the ultimate goal of our students’ research is to provide relevant inputs for the design, implementation, and evaluation of public policy and corporate strategies. The graduate program will introduce students to several important applications of the EBE paradigm in public policy and private firms, among them three research areas in which the members of the core faculty conduct their own research:
Individual behavior and long-run outcomes in health and education
Many individual economic decisions have long-run consequences, and they often involve high short-run costs while the returns arise only over time. Important examples are investments in health and education. Neoclassical economic analysis, based on rational, forward-looking behavior, can characterize the intertemporal trade-offs that individuals face. However, research in economic psychology has shown that individuals often are not fully rational and forward-looking. The resulting under-investment in health and education has potentially large future costs, both for the individual and society as a whole.
Incentives in firms and markets
The key issue in contract theory and organizational economics is to understand the effects of incentive systems and organizational structures on behavior. To improve our understanding of incentives in firms and markets and to be able to suggest improved structures, we need to test the relative effects of incentive schemes and organizational practices rigorously. With the aim of drawing causal inferences, we will employ laboratory experiments, field experiments and matching of specifically designed surveys to existing administrative data. Behavioral approaches play a major role in modern organizational and labor economics. We will therefore base the empirical research program on sound theoretical modeling that explicitly accounts for behavioral aspects.
Institution design constrained by social norms and material incentives
Individually rational and selfish behavior can lead to socially undesirable outcomes. Prominent examples for such social dilemmas are low levels of tax compliance, the (over-)use of natural resources, and low voter turnout at elections. Social norms are sometimes able to sustain socially desirable outcomes, sometimes not. In this context, we are interested in studying the interplay between incentives and social norms in achieving socially desirable outcomes. Our research aims at understanding this interplay as well as the heterogeneity of decision makers with regard to social norm perception, and to develop institutional designs that lead to socially optimal results.