This paper studies profit-maximizing seller behavior when brand image affects consumer demand. We consider a seller facing a population of consumers with heterogeneous tastes regarding product quality and brand image. First, we analyze “active branding” by the seller through costly...

This paper examines demand-enhancing investment and pricing in mixed duopoly. We analyze a model with differentiated products and reduced-form demand, making no assumptions on the relative efficiency of the public firm. First, we derive sufficient conditions for public investment to crowd out...

This paper studies the creation of property rights in a state of anarchy and in the presence of uncertainty about a potential appropriator's ability. In a game of conflict, securing property can be achieved by spending resources for protection. We show that secure property rights will never...

This survey gives a brief overview of the literature on the difference-in-difference (DiD) estimation strategy and discusses major issues using a treatment effect perspective. In this sense, this survey gives a somewhat different view on DiD than the standard textbook discussion of the...

We investigate the finite sample properties of a large number of estimators for the average treatment effect on the treated that are suitable when adjustment for observable covariates is required, like inverse pro¬bability weighting, kernel and other variants of matching, as well as different...

Times of high unemployment always inspire debates on the role of labor market policy and its optimal implementation. This paper uses a dynamic model of search unemployment and bilateral wage bargaining to characterize optimal labor market policy in a possibly turbulent environment. A firing...

In the presence of an endogenous treatment and a valid instrument, causal effects are (nonparametrically) point identified only for the subpopulation of compliers, given that the treatment is monotone in the instrument. Further populations of likely policy interest have been widely ignored in...

Equity index implied volatility functions are known to be excessively skewed in comparison with implied volatility at the single stock level. We study this stylized fact for the case of a major German stock index, the DAX, by recovering index implied volatility from simulating the 30 dimensional...

This contribution to the Handbook of Computational Finance, Springer-Verlag, gives an overview on modeling implied volatility data. After introducing the concept of Black-Scholes-Merton implied volatility (IV), the empirical stylized facts of IV data are reviewed. We then discuss recent results...

This study investigates loss aversion when the reference point is a state-dependent random variable. This case describes, for example, a money manager being evaluated relative to a risky benchmark index rather than a fixed target return level. Using a state-dependent structure, prospects are...