ERC Grants

P3OPLE – Peers and Possible Partners: exploring the Origins of Population Long-term Equilibria

Population dynamics are a crucial driver of the prosperity of nations. Nowadays, fertility is too high in less developed countries, impeding their escape from poverty, and too low in more developed countries, threatening their very existence. Another concern is the global rise of childlessness among men, which correlates with mental health issues and social unrest.

P3OPLE contributes to addressing these challenges by studying how social and market interactions shape the dynamics and distribution of fertility. Pauline Rossi will introduce and test the empirical relevance of two novel concepts: high / low fertility traps and involuntary male childlessness:

• The first concept revolves around peer effects in fertility preferences and revisits an unsettled debate: why are some communities trapped in sub-optimally high or low fertility equilibria? Prof. Rossi will discuss how information and coordination failures, conformism and competition, as well as immigration, can prevent or facilitate fertility change.
• The second concept deals with general equilibrium effects on the matching market and raises an unexplored question: can a man be involuntary childless due to a relative scarcity of female partners on the matching market? She will quantify the importance of unbalanced sex ratios, polygamy and serial monogamy as drivers of reproductive inequalities.

Both concepts cross the boundaries of disciplines by integrating insights from demography, sociology and evolutionary biology into economic frameworks. The methodology will combine economic theory and cutting edge empirical analysis, including experimental, observational and structural methods, to provide quantitative evidence on novel causal links.

Finally, Pauline Rossi will build databases with information on male fertility and subjective determinants of fertility never consolidated or collected at such a large scale. They will allo researchers to answer open questions and explore novel ideas inspired by hitherto undocumented patterns.

Find all news and more information about the P3OPLE project on the CREST website.

INASHI – Information frictions in hiring decisions

Over the last decades, internet has sped up and increased interactions between employers and workers, but aggregate unemployment does not seem to have been much impacted by this revolution. This could be because information frictions are not a first-order contributor of unemployment, or because current tools and institutions do not enable truthful and effective communication between firms and workers.

Employers, who are often on the short side of the market, find it difficult and costly to screen potential employees. INASHI aims to provide theoretical frameworks and new empirical evidence about what the remaining information imperfections on the labour market are, how important they are to aggregate unemployment and unemployment of the most vulnerable segments of the labour market, and what solutions can be put in place to improve the recruiting process.

INASHI will combine novel data on how firms search for workers on large online job boards with administrative data on vacancies, and matched employer-employee data.

Roland Rathelot also leverage a series of randomised controlled trials to test how the provision of new information to employers, whether about candidates or about features of the market, help them make better hiring decisions, leading ultimately to higher aggregate hiring, and higher-quality matches.

Three countries will be studies, Austria, France and Sweden, so that INASHI will provide evidence valid in a variety of contexts.

Find all news and more information about the INASHI project on the CREST website.

SinfoNiA - Strategic Information: New Directions and Applications

In a world saturated with data, the role of information as a coordination mechanism for economic activity is becoming increasingly central, influencing phenomena such as financial crises, currency attacks, and social stability. 

Although the importance of information as a driving force is widely acknowledged, current models of coordination and robustness remain limited to a narrow class of binary-action supermodular games. 

Building on recent methodological advances by Olivier Gossner's project as a proof of concept, SInfoNiA proposes a model of strategic types that will make it possible to define the role of information in general strategic situations. 

Our methodology departs from the conventional approach by situating all information in relation to the game under study. Rather than treating the description of information as a distinct entity, separate from the game, we focus the analysis on strategically relevant information within a specific, predefined game context. 

SInfoNiA will lay new foundations for the analysis of information in economics and explore novel positive and normative implications, structured around seven work packages (WP). 

Find all news and more information about the SinfoNiA project on the CREST website.

MADPART - Market Design and Participation: Comprehensive Design for Matching Markets

Market Design combines theoretical and empirical methods to design, analyze, and improve real-world matching markets. Many of these markets involve little or no monetary transfers: the assignment of civil servants (e.g. teachers), allocation of daycare slots for children, organ transplants for patients, ans so on. These markets often interact with outside opportunities or with each other over time.

For example, a patient in need of a kidney transplant may have multiple treatment options; families may choose between different childcare arrangements; public school teachers may request serveral transfers during their careers. However, little is known about how these multiple opportunities interact with the matching process. Incorporating such options into the design of these markets is challenging due to both data scarcity and the complexity of the models required. 

Julien Combe's project aims to address these challenges by understanding and improving the design of matching markets in the presence of outside options. It has two main objectives:

1. Examine how outside options can discourage participation in the market and undermine public policy objectives, in particular by analyzing the role of "participation-blind" procedures in these losses. 

2. Identify new and innovative designs to improve the functioning of these markets.

To this end, the project will combine advanced theoretical models with cutting-edge empirical methods. It will leverage unique datasets from four matching markets:

• the allocation of teachers to public schools,

• the allocation of public daycare places,

• the allocation of kidneys to patients,

• the allocation of social housing.

These markets feature dynamic interactions with outside options. The results of the project will lead to a more comprehensive and in-depth understanding of matching markets and could result in major innovations in public policy.

Find all news and more information about the MADPART project on the CREST website.

FIBEGA - Filling the Behavioral Gap in Disaster Risk Reduction and Climate Change Adaptation

Are only careless people the ones who drown, and are the only victims of floods compulsive gamblers? This simplistic view is based on flawed assumptions, and the European Union's ambition to build a disaster- and climate- resilient society cannot be achieved by relying on "behavior-blind" assessments and policies.

The behavior of individuals, businesses, and public services before, during, and after a crisis has a major impact on damages, recovery, and resilience. Yet current assessments fail to incorporate these critical factors, largely because they are insufficiently understood.

Floods and weather-related hazards affect 2 billion people, and this exposure is expected to increase with climate change. Despite massive public investment, current flood risk reduction and planning policies have failed to significantly reduce loss of life and property. The main reason lies in the mismatch between the growing number of risk, vulnerability, and resilience assessments, and the limited understanding of their empirical validity. 

The central aim of this project is to move toward "behavior-aware" assessments, indicators, and policies in order to save lives and protect public finances. Removing current barriers to predicting and simulating risk perception and behavior will generate new knowledge and open up fresh perspectives. Social and technological changes have widened gaps in our understanding, making new empirical research essential to refine or replace existing theories. 

The project will deliver four demonstrators representative of the European and Mediterranean context, differing in size, wealth, and exposure: Paris, Barcelona, Bucharest, and Algiers. The goal is to enable cross-validation on flood risks and to assess the transferability of findings to other types of emergencies (technological disasters, epidemics, terrorism, etc.).

It will launch a new line of research by developing "behavior-aware" participatory assessments and indicators, as well as spatially explicit, interactive short- and long-term simulation tools, enabling decision-makers to rethink their strategies and policies.

Find all news and more information about the FIBEGA project on the CREST website.

PROSPECT - Biases in prospective learning and dynamic choice

Many important economic decisions are made after individuals have had the opportunity to acquire information. For example, investors may research company fundamentals to estimate future stock prices; consumers may read reviews before making a purchase; managers may test different organizational structures before adopting one. 

Since information acquisition comes at a cost, decision-makers must evaluate its potential benefits ex ante through prospective learning - that is, by attempting to predict the amount of information they will receive. 

The PROSPECT project aims to experimentally determine whether individuals are able to correctly assess the benefits of future information acquisition and to use this information proactively when making dynamic choices. The main objective is to uncover potential fundamental biases in dynamic decision-making, such as a tendency to acquire too little information or to under-experiment relative to the rational benchmark.

• Part one: Yves Le Yaouanq will seek to identify biases in prospective learning. The key question is whether individuals can accurately forecast the amount of information that a given event will reveal. To answer this, he will conduct a series of experiments in which participants must estimate the value of real, naturalistic information, such as financial data.
• Part two: This part will study how individuals take prospective considerations into account when solving dynamic decision problems. The question is whether individuals acquire the right quantity and type of information when doing so is costly. A series of experiments will explore this issue across various types of decision problems (active experimentation, information acquisition, allocation of attention to different types of news, dynamic choice with self-control issues).

Find all news and more information about the PROSPECT project on the CREST website.