Reference-Dependent Preferences in Contests and Non-Cognitive Ability in the Labour Market

Abstract

The dissertation includes four individual essays that are laid out over four separate chapters. Following a short overall introduction in Chapter 1, Chapter 2 models the strategic interaction between two agents who engage in a game-theoretical contest and hold expectation-based reference-dependent preferences. We show, that agents who find themselves disadvantaged ex ante, in this setting end up as favourites in two out of three possible equilibria. In Chapter 3 we investigate, using field data, whether it is possible to invest in non-cognitive ability through an educational policy. We measure the impact of a study abroad experience on non-cognitive skills and compute its monetary implications using wage data from the German Socio-Economic Panel. The project presented in Chapter 4 is an outcome of initiating the study series Fachkraft 2020 which is, at the moment of writing, the biggest student survey in Germany with more than 40,000 annual participants. Based on about 23,000 student responses we examine whether there is selection and change of non-cognitive abilities in different study tracks of German higher education. We find sizeable selection, but little change. Lastly, Chapter 5 models the impact of the internationalisation of higher education on economic growth in a two country setting. We provide conditions necessary for internationalisation to be beneficent and simulate different growth paths for both countries.