Länger leben — Siechtum und Pflege ohne Grenzen?

At present, our society and its social security system are not prepared to cope with the challenges resulting from the continuous increase of life expectancy. The traditional concept of disease has to be modified for serving the special needs of the elderly. The optimistic compression of disease theory is an intriguing model, but lacks prove by available data. The anti-aging boom diverts the focus from the social and financial burden that will be unevitably caused by long-term care in the future. If there will not be an — up to now unforeseeable — breakthrough in research, particularly dementia will have an enormous impact on social cost which is often underestimated.     

Stability and Segregation in Group Formation

This paper presents a model of group formation based on the assumption that individuals prefer to associate with people similar to them. It is shown that, in general, if the number of groups that can be formed is bounded, then a stable partition of the society into groups may not exist. (A partition is defined as stable if none of the individuals would prefer be in a different group than the one he is in.) However, if individuals' characteristics are one-dimensional, then a stable partition always exists. We give sufficient conditions for stable partitions to be segregating (in the sense that, for example, low-characteristic individuals are in one group and high-characteristic ones are in another) and Pareto efficient. In addition, we propose a dynamic model of individual myopic behavior describing the evolution of group formation to an eventual stable, segregating, and Pareto efficient partition. Journal of Economic Literature Classification Numbers: C72, H41.     

The Effect of Communication Media on Cooperation

Abstract. We examine how communication affects cooperation with the help of seven standard public goods experiments that only differ with respect to the medium of pre‐play communication. Our treatments include bidirectional and unidirectional communication via (mostly electronic) auditory and/or visual channels. The results suggest that successful cooperation is attributable to the opportunity of ‘coordinating’ behavior in the communication phase. Furthermore, both the level and the stability of cooperation significantly interact with the communication medium, even though the content of communication is remarkably similar across the communication treatments.     

Experiments in Environmental Economics and Some Close Relatives

Abstract.  It is not only the great number of papers written on environment economics that make it worth dealing with this special branch of experimental research, but the environmental problem in all its facets seems to serve as a catalyst for identifying some methodological problems of the experimental method. For this reason, we will not only try to give an overview of recent experiments in environmental economics but also add some thoughts on the methodological implications of this work. We identify three direct connecting factors for the experimental method and environmental economics. First, social dilemmas are, in many cases, at the core of environmental problems. Experiments are able to test theoretical hypotheses for individual behavior in such social dilemma situations. The second connecting factor comes from the field of applied experimental work and can be characterized as the testbedding of institutional arrangements for the solution of environmental problems. The last direct application of experimental methods to environmental economics concerns the individual evaluation of environmental resources.     

The demand commitment bargaining and snowballing cooperation

Summary A multi-person bargaining model based on sequential demands is studied for coalitional games with increasing returns to scale for cooperation. We show that for such games the (subgame perfect) equilibrium behavior leads to a payoff distribution which approaches the Shapley value as the money unit approaches 0. Subgame consistency and strategic equilibria are the main tools used in the analysis. The model is then applied to study a problem of public good consumption.I wish to thank Reinhard Selten, who introduced me with the topic of non-cooperative coalition bargaining, for many constructive discussions. Al Roth's warm hospitality during the academic year 1990–1991, as well as many useful remarks are also gratefully acknowledged. Helpful discussions with Dieter Balkenborg, Tatsuro Ichiishi, Richard Mclean, Benny Moldovanu, Daniel Seidmann Avner Shaked are gratefully acknowledged as well. Part of this research was also supported by the Deutscheforschungsgemeinschaft SFB 303 at the University of Bonn.     

Pension Reform, Capital Markets and the Rate of Return

Abstract. This paper discusses the consequences of population aging and a fundamental pension reform – that is, a shift towards more pre‐funding – for capital markets in Germany. We use a stylized closed‐economy, overlapping‐generations model to compare the effects of the recent German pension reform with those of a more decisive reform that would freeze the current pay‐as‐you‐go contribution rate and thus result in a larger funded component of the pension system. We predict rates of return to capital under both reform scenarios over a long horizon, taking demographic projections as given. Our main finding is that the future decrease in the rate of return is much smaller than often claimed in the public debate. Our simulations show that the capital stock will decrease once the baby‐boom generations enter retirement, even if there were no fundamental pension reform. The corresponding decrease in the rate of return, the direct effect of population aging, is around 0.7 percentage points. While the capital market effects of the recent German pension reform are marginal, the rate of return to capital would decrease by an additional 0.5 percentage points under the more decisive reform proposal.     

Zielsetzungen der Versicherungsaufsicht

While financial state supervision has intensified legal supervision of insurance companies, the doctrine of the state’ s duty to protect constitutional rights of the insured has consistently been rolled back: merely legality control, the principle of subsidiarity in § 81 Insurance Supervision Act, the model of the informed consumer and the rejection of the trust models. Insurance companies are protected by national constitutional rights, European law and in particular by the principle of necessity. The aim of state supervision is not only to protect the insured, but also to guarantee a well-functioning private insurance industry. To some extent, state supervision is acquiring a merely warranting character; consensual administration is becoming more common — this does not, however, alter the aims of supervision.