A portrait of the institute
Initially founded as a Max Planck institute that investigates the provision of collective goods, the institute has developed into an international hub that focuses in its research mainly on applied economics and on behavioral law. Moreover, the institute hosts three independent research groups on “moral courage”, “economic cognition”, and “mechanisms of normative change”. The set of researchers from various disciplines, such as economics, law, psychology, and sociology, constitutes a truly interdisciplinary environment that facilitates a cross-fertilization of ideas. The institute’s research expertise covers a wide range of subjects, including the formation of economic preferences, team decision-making, the analysis of credence goods markets, the definition of normative problems that call for legal intervention, the effects of legal interventions, rule generation and rule application, the psychological processes of bystander interventions against norm violations, the cognitive and affective processes leading to choices, and reasoning about social norms.
Behavioral Law and Economics
Whatever the law achieves, it must do so by affecting the behavior of its subjects. This is why a behavioral perspective is fundamental to legal research. If the intervention targets behavior, the social problem that calls for intervention must be defined in behavioral terms as well. Why do individuals or organizations fail to coordinate? When and why do individuals create harm for others, unless guided or hindered by law? Or, in other words: Which is a behaviorally plausible definition of a collective-goods problem? How are those who create new legal rules, or those obliged to apply them, affected by behavioral effects? A behaviorally sound construction of the social problem is essential for the proper design of legal institutions. This design is often particularly challenging, since different groups of people behave in systematically different ways. Research undertaken by the group combines doctrine, comparative law, and legal and economic theory with empirics. Much empirical work is experimental, but the group is also increasingly using datasets generated by the judiciary and administration.
Research Description of the Experimental Economics Group
The “Experimental Economics Group“ was founded in October 2017 under the lead of Matthias Sutter. It focuses on using experimental methods – both in the lab and recently mainly in the field – to study a broad variety of questions that are relevant for society. Among others, three areas of research are particularly prominent in our work.
First, the group studies how economic preferences develop in childhood and adolescence. This area includes investigating the factors that determine the economic preferences of young people, and devising interventions to shape behavior in a way that promotes success in life. In addition to investigating the behavior of children and adolescence, we are also studying whole families in order to examine the intergenerational transmission of cognitive and non-cognitive skills.
Second, the group has a strong focus on behavioral development economics by studying, for example, the effects of scarcity on economic decision making in Kenia or how information provision can improve health conditions of families in rural villages of India or Bangladesh. Through Randomized Controlled Trials (RCTs), we aim at identifying cost-efficient interventions that promote better health.
Third, the group focuses on how fairness concerns and social norms promote efficient social interactions. Here, the group concentrates on understanding the role of fairness, honesty and other determinants, such as social and self image concerns as a prerequisite for mutually beneficial social interactions. We study these questions both in the laboratory, but also with companies in field experiments.
