Kai A. Konrad

Kai A. Konrad
Max Planck Institute for Tax Law and Public Finance · Public Economics

About

263
Publications
29,937
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5,956
Citations
Citations since 2017
26 Research Items
1599 Citations
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2017201820192020202120222023050100150200250300
2017201820192020202120222023050100150200250300

Publications

Publications (263)
Article
We study collective action under adverse incentives: each member of the group has a given budget (‘use-it-or-lose-it’) that is private information and can be used for contributions to make the group win a prize and for internal fights over this very prize. Even in the face of such rivalry in resource use, the group often succeeds in overcoming the...
Article
Unlike produced commodities, the extraction and sale of fossil energy resources such as oil or natural gas is an “asset swap”: assets stored in the ground are converted into financial assets. The value of assets in the ground is reduced by the amount taken out and sold. This is important for assessing the coercive power of the threat of implementin...
Article
We study equilibrium in a multi-battle attack-and-defense game in which victory in each single battle is deterministically awarded to the player who expends more conflict resources in the respective battle. One player has a pre-determined budget which can be allocated across two battlefields. The cost of the budget is sunk. The other player can mob...
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We study the long-run stochastic stability properties of volunteering strategies in finite populations. We allow for mixed strategies, characterized by the probability that a player may not volunteer. A pairwise comparison of evolutionary strategies shows that the strategy with a lower probability of volunteering is advantaged. However, in the long...
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en We compare the success probability of multilateral negotiations and sequential negotiations over international tax cooperation. To make this difference relevant, we introduce incomplete information as a friction that can lead to bargaining failure. We find plausible conditions for when multilateral negotiations are more likely to achieve full gl...
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We study self-selection into earning money in an honest or dishonest fashion based on individuals’ attitudes toward truthful reporting. We propose a decision-theoretic framework where individuals’ willingness to pay for honest earnings is determined by their (behavioral) lying costs. Our laboratory experiment identifies lying costs as the decisive...
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We consider a preemption game between competing groups; firms lobbying individually for their groups' interests provide an empirical example. Among symmetric groups, the first firm to take action bears an (unobserved) cost and wins the prize on behalf of its group. In equilibrium, the firm with the lowest cost takes action, but with delay. More com...
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We consider ultimatum bargaining between a seller and a buyer of an asset. They know each other's valuation of the asset. Both can defer their decisions to delegates. These delegates have opaque preferences. Seller and buyer choose the opacity of their delegate. For the seller's delegate this choice is restricted to a random reservation price drawn...
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We study learning and selection and their implications for possible effort escalation in a simple game of dynamic property rights conflict: a multi-stage contest with random resolve. Accounting for the empirically well-documented heterogeneity of behavioral motives of players in such games turns the interaction into a dynamic game of incomplete inf...
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The future consequences of climate change are highly uncertain and estimates of economic damages differ widely. Governments try to cope with these risks by investing in mitigation and adaptation measures. In contrast to most of the existing literature, we explicitly model the decision of risk averse governments on mitigation and adaptation policies...
Article
Time is a crucial determinant of deception, since some misreporting opportunities come as a surprise and require an intuitive decision while others allow for extensive reflection time. To be able to pursue a deceptive strategy, however, a subject must be aware of the misreporting opportunity. This paper provides experimental evidence on the role of...
Article
We consider two players' choice about the formation of an alliance ahead of conflict in a framework with incomplete information about the strength of the potential ally. When deciding on alliance formation, players anticipate the self-selection of other players and the informational value of own and other players' choices. In the absence of these s...
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In a courtship game, wasteful conspicuous spending may provide information about some components of a suitor’s income. But conspicuous spending may be costly not only for the potential husband but also for the woman: it reduces the wealth of the man she may marry. In the optimal contractual arrangement, the bride’s cost moderates the threshold valu...
Book
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EN: The EU of the future needs a well-functioning and fair system to finance its tasks. This book presents a collection of papers from distinguished scholars in economics and law that discuss the need and the options for a reform. // DE: Dieses Buch vereint unterschiedliche Analysen zum gegenwärtigen Finanzierungssystem der Europäischen Union und...
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This paper considers evolutionarily stable strategies (ESS) in a take-it-or-leave-it offer bargaining game with incomplete information. We find responders reject offers which yield a higher positive material payoff than their outside option. Proposers, in turn, may make more attractive offers than in the perfect Bayesian equilibrium. Efficiency-enh...
Article
In this paper, we study the effect of endogenous audit probabilities on reporting behavior in a face-to-face compliance situation, such as at customs. In an experimental setting in which underreporting has a higher expected payoff than truthful reporting, we find an increase in compliance of about 80 percent if subjects have reason to believe that...
Article
Love and other emotional rents play an important role for marriage decisions. A mutually happy marriage often ends a long series of emotionally disappointing matches. This paper analyses the role of “speed daters”, that is, individuals who are matched more frequently with new possible marriage partners. Speed daters change the equilibrium in a marr...
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We study deception choices, the self-selection of capable and less capable deceivers and deception detection in a tax compliance experiment. We find large systematic differences between whether subjects are perceived as honest or as dishonest. Taxpayers are seemingly aware of these perceptions. The empirical outcomes are in line with a theory sugge...
Article
A lack of sufficient diversification in research strategies has been identified as an important problem for delegated research. We show that this problem can be solved by local competition (such as bribery, lobbying, rent seeking, competition at the patent office) among players who apply the same search strategies or develop the same design. Such c...
Article
Deutschland hat nicht unerhebliche Mengen an unkonventionellen Erdgasreserven, die in tiefen Lagen in Schiefergestein gebunden sind. Die Diskussion um die Frage, ob diese beachtlichen Reserven durch moderne Bohr- und Fördertechniken (sogenanntes Hydraulic Fracturing — „Fracking“) gehoben werden sollten, spitzt sich derzeit zu. Die Autoren nutzen di...
Article
Der wissenschaftliche Beirat beim Bundesfinanzministerium hat jüngst in einer Stellungnahme darauf aufmerksam gemacht, dass die gegenwärtige Finanzordnung in der Europäischen Währungsunion dem Staat in seiner Eigenschaft als Schuldner besondere Privilegien einräumt.1 Die Autoren geben einen kurzen Überblick über diese Privilegien, diskutieren die d...
Article
We study the role of an imbalance in fighting strengths when players bargain in the shadow of conflict. Our experimental results suggest: In a simple bargaining game with an exogenous mediation proposal, the likelihood of conflict is independent of the balance of power. If bargaining involves endogenous demand choices, however, the likelihood of co...
Article
We consider a two-candidate campaign competition in majoritarian systems with many voters. Some voters are loyal, some can be influenced by campaign spending. Own loyalty with respect to a candidate is the voter's private information. Candidates simultaneously choose their campaign budgets and how to allocate them among the voters. We show that a c...
Article
This paper considers evolutionarily stable strategies (ESS) in a take-it-or-leave-it offer bargaining game with incomplete information. We find responders reject offers which yield a higher positive material payoff than their outside option. Proposers, in turn, make more attractive offers than in the perfect Bayesian equilibrium. Efficiency-enhanci...
Article
When politicians negotiate in international climate conventions they may suffer from incomplete information about each other's preferences about reaching an agreement. As is known, this may cause failure to reach an efficient cooperative agreement. We study the role of the clean development mechanism (CDM) for the likelihood of such failure. The CD...
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Die Debatte über Offshore-Leaks und die sehr geringen Steuerzahlungen großer multinationaler Konzerne haben das öffentliche Interesse auf das Problem „Steueroasen“ gelenkt. Wenn Konzerne Steuersatzunterschiede zwischen verschiedenen Ländern ausnutzen, kann Steuergestaltung durchaus legal sein. Werden aber steuerpflichtige Einkommen von Privatperson...
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This paper considers evolutionarily stable decisions about whether to initiate violent confl‡ict rather than accepting a peaceful sharing outcome. Focusing on small sets of players such as countries in a geographically con…fined area, we use Schaffer'’s (1988) concept of evolutionary stability. We …find that players' ’evolutionarily stable preferen...
Article
We consider a lie-catching experiment with 9240 judgements. A set of videotapes shows subjects participating in a tax compliance experiment. The subjects chose whether or not to misreport. Subjects knew that underreporters were chosen for an audit with some probability. An audit led to detection and to a punishment fee. This compliance framework in...
Article
What is the strategic role of membership in an intergovernmental group with unanimity requirements if the group negotiates with an external player in a setting with incomplete information? Being in such a group has a strategic effect compared to negotiating as a stand-alone player and reduces the demands of the outside player: being in a group lend...
Article
Victorious alliances often fight about the spoils of war. We consider experimentally when members of victorious alliances accept a peaceful division of the spoils, and when they fight against each other, and how the inability to commit to a peaceful division affects their effort contributions in their fight against a common enemy. First, we find th...
Article
We study endogenous group formation in tournaments employing experimental three-player contests. We find that players in endogenously formed alliances cope better with the moral hazard problem in groups than players who are forced into an alliance. Also, players who are committed to expending effort above average choose to stand alone. If these str...
Article
This paper assesses the role of the public sector in adaptation to climate change. We first offer a definition and categorization of climate change adaptation. We then consider the primary economic principles that can guide the assignment of adaptation tasks to either the private or the public sector, as well as those guiding assignment within the...
Article
We study conflict between two groups of individuals. Using Schaffer's (1988) concept of evolutionary stability we provide an evolutionary underpinning for in-group altruism combined with spiteful behavior towards members of the rival out-group. We characterize the set of evolutionarily stable combinations of in-group favoritism and out-group spite...
Article
This paper surveys the theory of international tax competition and coordination, which, matching the increasing policy importance of the topic, has grown substantially over the last thirty years. It focuses on the taxation of capital income, stressing that issues arise not only in relation to movements of productive capital – the primary concern in...
Article
We link two cross-country datasets to analyse the relationship between individuals' patriotism and attitudes toward tax compliance. The datasets contain a number of variables that shape individuals' opportunities as well as expected benefits from tax evasion. We find a robust positive association between patriotism and tax compliance. The findings...
Article
Considering several main types of dynamic contests (the race, the tug-of-war, elimination contests and iterated incumbency fights) we identify a common pattern: the discouragement effect. This effect explains why the sum of rent-seeking efforts often falls considerably short of the prize that is at stake. It may cause violent conflict in early roun...
Article
We analyse bargaining over international climate agreements in a setting with incomplete information about abatement costs. Incomplete information is known as one of the key reasons why negotiations may fail more generally, and why efficiency gains cannot be exploited. We ask whether unilateral commitment to high abatement reduces or increases the...
Article
Full-text available
Recent advances in understanding links between genes and the susceptibility to particular diseases have considerably increased the scope for predictive diagnosis. Methods. We analyse how the introduc- tion of predictive diagnosis affects patients’decisions to undergo medical screenings relying on a “rational choice”model. Findings. We show that pre...
Article
This paper studies the role of beliefs about how own appearance and performance affect the subjective probability of being audited in a compliance situation, e.g. at customs. In an experiment in which underreporting has a higher expected payoff than truthful reporting we find an increase in compliance of about 80% if subjects have reason to believe...
Article
This paper highlights that reform of pension systems is mainly a matter of redistribution between the currently retired generation, the current workforce, and their children, between high income earn- ers and low income earners, between those currently paying into the system and those who do not, and between families with many chil- dren and famili...
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In this paper, we study bilateral mergers in experimental Cournot markets with initially three or four firms. Theory predicts pre-and post-merger total output well. However, merged firms produce significantly more than firms without a merger history. As a result, mergers are not as unprofitable as predicted. By analyzing two control treatments, we...
Article
This chapter examines the scope for alliance formation in conflict, focusing on aspects and considerations in alliance formation that offset the strategic disadvantages. It considers (1) supermodularity in alliance members’ efforts; (2) budget constraints that are sufficiently tight to remove the strategic problems of free-riding and holdup; (3) th...
Article
This paper analyzes the role of narrowly selfish and other-regarding preferences for the median voter in a Meltzer-Richard (1981) framework. We use computerized and real human co-players to distinguish between these sets of motivations. Redistribution to real co-players has a negative effect on the median voter's tax rate choice. Further, perceived...
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We show how norms can solve the distributional conflict inside a group in an anarchic environment and yield efficient coordination of collective action in a conflict with an external competitor. The equilibrium of the fully non-cooperative game with finite horizon has two interesting features. First, one of the players assumes a central role that r...
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Für die Klimapolitik einzelner Länder spielt nach Ansicht von Heike Auerswald, Technische Universität Dresden, Kai A. Konrad, Max-Planck-Institut für Steuerrecht und Öffentliche Finanzen, und Marcel Thum, Technische Universität Dresden und Niederlassung Dresden des ifo Instituts, neben der globalen Bedeutung des Problems die große Unsicherheit bezü...
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Die gegenwärtige im Kyoto-Protokoll festgelegte Klimapolitik versucht vorrangig, dem Klimawandel mit einer Strategie der Emissionsverminderung zu begegnen. Die dort festgelegten Reduktionsziele für den CO2-Ausstoß sind für viele Länder nicht mehr zu realisieren. Und einige Länder, die zu den größten Emittenten gehören, vor allem die USA, haben sich...
Article
Our experimental analysis of alliances in conflicts leads to three main findings. First, even in the absence of repeated interaction, direct contact or communication, free-riding among alliance members is far less pronounced than what would be expected from non-cooperative theory. Second, this possible solidarity among ‘brothers in arms’ when fight...
Article
Our experimental analysis of alliances in conflicts leads to three main findings. First, even in the absence of repeated interaction, direct contact or communication, free-riding among alliance members is far less pronounced than what would be expected from non-cooperative theory. Second, this possible solidarity among ‘brothers in arms’ when fight...
Article
Countries differ in their governmental architectures and in the rules that describe the allocation of tasks, rights and duties across the various levels of government. In this paper, we present a short and selective survey of the development of the theory of optimal allocation of rights and duties along the vertical dimension in federations. We the...
Article
Considering several main types of dynamic contests (the race, the tug-of-war, elimination contests and iterated incumbency fights) we identify a common pattern: the discouragement effect. This effect explains why the sum of rentseeking efforts often falls considerably short of the prize that is at stake. It may cause violent conflict in early round...
Article
"This paper studies corporate tax competition if it is costly to learn some of the elements that determine the effective tax burden. Search cost may, but need not, eliminate the tax competition pressure. The outcome depends on the boundaries of tax rate and tax base choices. Search cost can explain the empirically observed tax cuts cum base broaden...
Article
We investigate redistributive taxation in a political economy experiment and determine how different patterns of social mobility affect the choices of redistributional taxes. In the absence of social mobility, voters choose tax rates that are very well in line with the prediction derived in the standard framework by Meltzer and Richard (1981). Howe...
Article
This paper develops a competition theory framework that evaluates an important aspect of the OECD’s Harmful Tax Practices Initiative against tax havens. We show that the sequential nature of the process is harmful and more costly than a “big bang” multilateral agreement. The sequentiality may even prevent the process from being completed successful...
Article
Consumers often complain that retail prices respond faster to increases in wholesale prices than to decreases. Despite many empirical studies con…rming this "Rockets-and-Feathers"phenomenon for di¤erent industries, the mechan-ism driving it is not well understood. In this paper, we show that, in contrast to the theoretical prediction, asymmetric pr...
Article
This article studies the explanatory power of intangible factors – such as country stereotypes and consumer perceptions – for the size of foreign direct investment (FDI) flows, controlling for fundamental variables. To operationalize the concept of these intangibles we use the idea of the ‘nation brand’. Nation brands are strongly related to the id...
Article
We study the equilibrium effects of mergers between firms with brand portfolios and brand loyal customers for pricing and profitability. We find that the "merger paradox" (Salant, Switzer and Reynolds 1983) is absent in these markets. The acquisition of brand portfolios can be profit enhancing for the merging firms and payoff neutral for the firms...
Article
Zusammenfassung Die Krise Griechenlands wächst sich zu einer Gefahr für den gesamten Euroraum aus. Wie soll die Europäische Union darauf reagieren? Sie befindet sich im Dilemma zwischen Bailout und Bestrafung des „Defizitsünders“. Das erste scheint für den Bestand der Währungsunion unvermeidlich, das zweite ist erforderlich, um einen Moral Hazard z...
Article
We study the role of information exchange that may occur in alliances in a contest without noise. Contestants learn their own limits of what they can spend in a contest. They may also form alliances and learn the limits of all players who are within the same alliance. Then they decide independently about their own contest efforts. Alliance formatio...
Article
Countries compete for new FDI investment, whereas stocks of FDI generate agglomeration benefits and are potentially subject to extortionary taxation. We study the interaction between these aspects in a simple vintage capital framework with discrete time and an infinite horizon, focussing on Markov perfect equilibrium. We show that the equilibrium t...
Article
"We consider the properties of perfectly discriminating contests in which players' abilities are stochastic, but become common knowledge before efforts are expended. Players whose expected ability is lower than that of their rivals may still earn a positive expected payoff from participating in the contest, which may explain why they participate. W...
Article
We analyze the incidence and welfare effects of unit sales tax increases in experimental monopoly and Bertrand markets. We find, in line with economic theory, that firms with no market power are able to shift a high share of the tax burden to consumers, independent of whether buyers are automated or human players. In monopoly markets, a monopolist...
Article
This chapter examines the effects on trade in capital and considers investment decision making regimes with either stationary or roving bandits. It provides the Markov perfect equilibrium in these cases and compares the investment incentive in the respective equilibria. It suggests that the investment incentives of a foreign direct investor depend...
Article
For patriotic citizens, living in their native country is intrinsically preferable compared to living in the diaspora. In this paper, we analyze the implications of such a patriotic lock-in in a world with international migration and redistributive taxation. In a formal model of redistribution with international migration and fiscal competition we...
Article
This paper shows that vertical fiscal inefficiencies impede federally organized countries in successfully attracting foreign direct investment. Such countries, particularly if characterized by weak institutions, are disadvantaged in the process of bidding for firms and in their ability to commit to a low overall tax burden. The interaction of these...
Article
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Vor dem Hintergrund der weltweiten Finanzmarkt- und Wirtschaftskrise fordern prominente �konomen zum Kurshalten in der deutschen Wirtschafts- und Arbeitsmarktpolitik auf. Die Experten legen einen Katalog mit Handlungsempfehlungen vor, der unter anderem die Korrektur falscher Erwerbsanreize durch das Workfare-Prinzip von Leistung und Gegenleistung i...

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