ANNUAL REPORT 2008 RESEARCH INSTITUTE IN ECONOMICS & ECONOMETRICS AMSTERDAM

ANNUAL REPORT 2008 RESEARCH INSTITUTE IN ECONOMICS & ECONOMETRICS AMSTERDAM

RESAM, Research institute in EconomicS & econometrics AmsterdaM ASE - University of Amsterdam School of Economics Roetersstraat 11, Room E 6.06 1018 WB Amsterdam Director : Prof.dr. H. Oosterbeek Office: Drs. M. Rottschäfer T +31-20-5254276 F +31-20-5254026 resam-ase@uva.nl www.ase.uva.nl/aseresearch 2

Table of Contents CHAPTER 1: INSTITUTIONAL REVIEW...7 1.1 MISSION STATEMENT... 7 1.2. ALLOCATING RESOURCES... 7 1.3. STRATEGY AND POLICY... 8 1.4 ORGANISATION... 9 CHAPTER 2: INPUT...11 2.1 RESEARCHERS AND OTHER PERSONNEL... 11 2.2 RESOURCES, FUNDING AND FACILITIES... 13 CHAPTER 3: CURRENT STATE OF AFFAIRS... 15 3.1 PROCESSES IN RESEARCH, INTERNAL AND EXTERNAL COLLABORATION... 15 3.2 ACADEMIC REPUTATION... 18 3.3 OVERVIEW OF RESULTS... 20 3.4 RELEVANCE TO SOCIETY... 21 CHAPTER 4: ANALYSIS, PERSPECTIVES AND EXPECTATIONS FOR THE INSTITUTE...23 4.1 ANNUAL ASSESSMENT DIRECTOR RESAM... 23 CHAPTER 5: UVA-ECONOMETRICS...29 5.1 MEMBERS OF THE RESEARCH GROUP AND RESEARCH IN FTES... 29 5.2 PROGRAMME DESIGN... 30 5.3 PROGRAMME EVALUATION... 32 5.4 RESOURCES AND FUNDING... 34 5.5 OUTPUT... 35 CHAPTER 6: OPERATIONS RESEARCH & MANAGEMENT...43 6.1 MEMBERS OF THE RESEARCH GROUP AND RESEARCH IN FTES... 43 6.2 PROGRAMME DESIGN... 43 6.3 PROGRAMME EVALUATION... 45 6.4 RESOURCES AND FUNDING... 46 6.5 OUTPUT... 47 CHAPTER 7: EQUILIBRIUM, EXPECTATIONS & DYNAMICS...53 7.1 MEMBERS OF THE RESEARCH GROUP AND RESEARCH IN FTES... 53 7.2 PROGRAMME DESIGN... 54 7.3 PROGRAMME EVALUATION... 55 7.4 RESOURCES AND FUNDING... 56 7.5 OUTPUT... 57 CHAPTER 8: ACTUARIAL SCIENCE...67 8.1 MEMBERS OF THE RESEARCH GROUP AND RESEARCH IN FTES... 67 8.2 PROGRAMME DESIGN... 67 8.3 PROGRAMME EVALUATION... 68 8.4 RESOURCES AND FUNDING... 69 8.5 OUTPUT... 70 3

CHAPTER 9: OTHER RESEARCH QUANTITATIVE ECONOMICS...77 16.1 MEMBERS OF THE RESEARCH GROUP AND RESEARCH IN FTES... 77 CHAPTER 10: MINT (MACRO AND INTERNATIONAL ECONOMICS)...79 10.1 MEMBERS OF THE RESEARCH GROUP AND RESEARCH IN FTES... 79 10.2 PROGRAMME DESIGN... 80 10.3 PROGRAMME EVALUATION... 81 10.4 OUTPUT... 84 CHAPTER 11: HUMAN CAPITAL...97 11.1 MEMBERS OF THE RESEARCH GROUP AND RESEARCH IN FTES... 97 11.2 PROGRAMME DESIGN... 98 11.3 PROGRAMME EVALUATION... 99 11.4 RESOURCES AND FUNDING... 99 11.5 OUTPUT... 100 CHAPTER 12: HISTORY & METHODOLOGY OF ECONOMICS: THEORIZING, MODELING AND POLICY APPLICATION... 111 12.1 MEMBERS OF THE RESEARCH GROUP AND RESEARCH IN FTES... 111 12.2 PROGRAMME DESIGN... 111 12.3 PROGRAMME EVALUATION... 112 12.4 RESOURCES AND FUNDING... 113 12.5 OUTPUT... 113 CHAPTER 13: EXPERIMENTAL & POLITICAL ECONOMICS (CREED)... 123 13.1 MEMBERS OF THE RESEARCH GROUP AND RESEARCH IN FTES... 123 13.2 PROGRAMME DESIGN... 124 13.3 PROGRAMME EVALUATION... 126 13.4 RESOURCES AND FUNDING... 126 13.5 OUTPUT... 127 CHAPTER 14: INDUSTRIAL ORGANISATION, COMPETITION POLICIES & REGULATION... 135 14.1 MEMBERS OF THE RESEARCH GROUP AND RESEARCH IN FTES... 135 14.2 PROGRAMME DESIGN... 135 14.2 PROGRAMME EVALUATION... 136 14.4 RESOURCES AND FUNDING... 138 14.5 OUTPUT... 138 CHAPTER 15: OTHER RESEARCH ECONOMICS... 145 16.1 MEMBERS OF THE RESEARCH GROUP AND RESEARCH IN FTES... 145 CHAPTER 16: SEO ECONOMIC RESEARCH... 146 16.1 MEMBERS OF THE RESEARCH GROUP AND RESEARCH IN FTES... 146 16.2 PROGRAMME DESIGN... 148 16.3 PROGRAMME EVALUATION... 149 16.4 RESOURCES AND FUNDING... 149 6.5 OUTPUT... 149 APPENDIX I: LIST OF PERSONS, COMMITTEES AND ADDRESSES... 163 APPENDIX II: ABBREVIATIONS... 169 4

A THE RESEARCH INSTITUTE 5

RESAM - Oosterbeek 6

RESAM - Oosterbeek CHAPTER 1: INSTITUTIONAL REVIEW 1.1 MISSION STATEMENT RESAM has the following mission statement. *RESAM aims for research results that significantly improve our understanding of the operation of economic systems, the behaviour of agents in the economy, and the effects of economic policies. *RESAM facilitates and promotes research by faculty members of the FEB to foster the academic ideal of intertwined university research and teaching. RESAM (Research in EconomicS and econometrics AmsterdaM) is one of the two research institutes of the Faculty of Economics & Business (FEB); the other being the research institute of the Amsterdam Business School (ABS-RI). RESAM was established in 1998 after the MUB (Wet Modernisering Universitair Bestuur (law on the modernization of university management)) came in effect. RESAM covers the wide area of economics and econometrics. Research is organised in Research Programmes, which are directed by Programme leaders who are experts with core positions in the curriculum. Stimulating research that significantly improves our understanding of the economy is meant as a focus on fundamental research. In many cases, the inspiration for research questions derives from practical problems in business and society as well as from pressing problems for government policies, as is only natural for a social science. But the research results should primarily be reported to the international academic community and assessed against the quality standards that apply there. Such permanent quality assessment feeds back into the quality of teaching and of advice given to business and the government. Contributions to public debates should be a consequence of developing reliable knowledge about the economy rather than a primary goal. RESAM closely co-operates with the Tinbergen Institute, where many of RESAM s researchers are appointed as fellow. The Tinbergen Institute also acts as the graduate school for RESAM Ph.D. students. 1.2. ALLOCATING RESOURCES The total faculty budget available in the FEB, after deducting resources for administrative positions, is divided between the two Schools, the School of Economics and the Business School. In principle time is equally allocated to teaching and to research. Schools are compensated by the research institute (RESAM for the School of Economics) and the teaching institute (OWI) for research and teaching tasks the department provides. Faculty members in the School of Economics are annually assigned time for research on the basis of their publication records in the past three years. In this way RESAM provides incentives to increase the quality and quantity of output. Publications are graded by quality level of the outlet. For journals, RESAM distinguishes A: excellent, international top level Publications in A level journals set directions for research, by approach and by method. They select topics and set standards for analytical and methodological level. B: good international level Publications in B level journals meet high analytic and methodological standards but have far less influence on direction and standards for future research. C: other refereed journals 7

RESAM - Oosterbeek These journals satisfy the minimum norm of aiming for an international or national audience, applying blind refereeing, and publish in an accessible language. Analytical and methodological standards satisfy a generally accepted minimum level. RESAM has drawn up a list of rankings of publication outlets (journals, publishing houses, conference proceedings, see the RESAM website http://www.medewerker.uva.nl/feb/sfr). The minimum norm for adequate research performance is formulated as 100 points over the past three years. An A-level publication counts for 100 points and a B-level counts for 50 points. C-level publications are worth no more points as of 2001. Individual authors of a publication with n authors each get a share of 2/(1+n) points of the publication. Research time assigned to individuals is related to publication points over the past three years as follows: 100 or more: 0.5 fte 50-99: 0.25 fte 1-49: 0.125 fte 0: 0 fte For faculty members with part-time positions, norms and research time are adjusted proportionally. Fellows of the Tinbergen Institute, the graduate research school in which UvA, EUR and VU co-operate, have a five year protection period of their research time at the maximum of 0.5 of their working hours. Admission as TI Fellow is based on A- and B-level publications only (TI has its own grading of publications). New appointees are allotted the maximum research time for a period of three years. RESAM stimulates concentration of the School s research in Research Programmes also by other means (such as an annual budget for conference visits and other academic activities to the research programmes). Once a year RESAM hosts a meeting of the Council of Programme Leaders to discuss the results of the past year and plans for the future. 1.3. STRATEGY AND POLICY After the VSNU Quality Assessment of Research in 1995, the Faculty started a process of realigning its research efforts by reducing the amount of research programmes. Before this assessment there were 25 programmes but in the next Quality Assessment (2001) only 14 programmes were submitted for evaluation. Several programmes in economics and econometrics were merged while research in the fields of marketing and management were discontinued. Thereafter the faculty has successfully focused its research programme even further. In 2002 the AgBS-RI (now ABS-RI) was established to stimulate research in business studies (with the three former RESAM programmes of Accounting, Organisations & Society, Corporate Finance & Financial Systems and Information Management). RESAM continued with eight research programme plus the SEO. 1 In 2005 a new programme has been established: Industrial Economics, Competition and Antitrust so RESAM now has a balanced portfolio of 10 research programmes. Last year two research programmes have changed their name; Industrial Economics, Competition and Antitrust has become Industrial Organisation, Competition Policies and Regulation, and Transformation of Europe has changed into Macroeconomics and International Economics Research Group, simply MInt. RESAM aims to reach its goals by organising, stimulating and monitoring Research Programmes. Annually, Programme performance is assessed. Means are allocated to Programmes based on performance. Research coverage is not directed and controlled by the Faculty s management, but develops in an open competitive environment. General policy issues are discussed at the annual meeting of the Council of Programme Directors. 1 The SEO has a rather special status. It is a foundation for commercial contract research which seeks to benefit from interaction with academic research. SEO is also considered as one of RESAMs research programmes. 8

RESAM - Oosterbeek 1.4 ORGANISATION From September 2009 onwards the Faculty of Economics and Business will celebrate the establishment of the College of Economics and Business, the Graduate School of Business and the Graduate School of Economics. From that moment the structure of the Faculty will be as shown in figure I. RESAM will become part of the Graduate School of Economics and will continue to serve as the research institute of the Amsterdam School of Economics Figure I: Organisational Chart 9

RESAM - Oosterbeek Box 1: Research Highlight: Roel Beetsma (MInt) Fiscal policy is divided into two stages, a planning, or budgeting, stage and an implementation stage. In two companion papers, we investigate behaviour of the policymakers in the two stages and, in particular, we explore how and why governments deviate from their original plans during implementation. We try to explain plans and deviations from those plans by using so-called realtime data, that is the data as they are first published, hence without any potential revisions made later on (revised or ex-post data). Real-time data are closest to the information policymakers have at the moment they take their decisions. Hence, those data are more informative about policymakers behaviour than ex-post data. In the first paper, based on OECD Economic Outlook data, Beetsma and Giuliodori (2008) use a panel of European Union (EU) and non-eu countries over the period 1995-2006 to explore whether discretionary fiscal policy has been pro- or countercyclical in the two policy stages. Discretionary fiscal policy refers to the active component of fiscal policy, in contrast to the government revenues and expenditures (in particular, unemployment benefits) changes that occur automatically as a result of changes in business cycle conditions. Fiscal policy is pro-cyclical (counter-cyclical) if it reacts with an expansion (contraction) to an improvement in the business cycle. Counter-cyclical fiscal policy is stabilising, while pro-cyclical fiscal policy is destabilising. We find marked differences in behaviour between the planning and implementation stages, as well as between fiscal policy of the EU countries and the other OECD countries. Planned fiscal policy is a-cyclical for the EU countries and counter-cyclical for the other countries. However, in the implementation stage, the EU countries react pro-cyclically to unexpected changes in the output gap, while the responses of the other OECD countries are a-cyclical. While the Europe s Stability and Convergence Programs are mostly aimed at the planning stage, these findings suggest that the EU fiscal rules should pay more attention at the implementation of fiscal policy. In the other paper, Beetsma et al. (2009), we use data from the Stability and Convergence Programs to establish a number of regularities. First, we find that implemented budgetary adjustment falls systematically short of planned adjustment and this shortfall increases with the projection horizon. Second, variability in the eventual fiscal outcomes is dominated by the implementation errors. Third, there is a only limited role for politics in both fiscal stages and, fourth, most importantly, both the ambition in fiscal plans and their eventual implementation benefit from stronger national fiscal institutions. In the paper, we also emphasise the importance of credible plans for the eventual fiscal outcomes. References: Beetsma, R. and M. Giuliodori (2008). Fiscal Adjustment to Cyclical Developments in the OECD: An Empirical Analysis Based on Real-Time Data, under revision. Appeared earlier as CEPR Discussion Paper, No.6692. Beetsma, R., Giuliodori, M. and P. Wierts (2009). Budgeting versus Implementing Fiscal Policy in the EU, Paper presented at the 49 th Panel Meeting of Economic Policy in Brussels. 10

RESAM - Oosterbeek CHAPTER 2: INPUT Personnel policy and human resource management is the domain of the department chairs. RESAM encourages the departments to hire good researchers and to stimulate faculty to increase the quality and quantity of academic publications, it cannot exert direct influence on personnel policy. Broader strategy issues concerning hiring and firing, however, are discussed within the Amsterdam School of Economics management team and this has resulted in a document on personnel policies wherein requirements current and new staff should meet are clearly defined. In 2005 it was decided that tenured positions will only be awarded to people that meet the admission requirements for fellowship of an accredited research school (preferably the Tinbergen Institute) and that in these cases the research director will be asked for advice. 2.1 RESEARCHERS AND OTHER PERSONNEL The tables below give information on RESAM faculty. Table I shows that, the overall research capacity is declining over the last three years. This development was mainly due to the decrease in the number of Ph.D. students during 2006 and 2007. This was expected, since the outflow of students from the Tinbergen Institute research master (Mphil) was not sufficient to fill all available positions. RESAM has tried to remedy this in 2007 by attracting PhD students from outside but was only partially successful in attracting excellent students. In 2008 the outflow increased which resulted in a small increase in the total number of Ph.D. students. Another reason for the decline in research FTE can be found in the decrease in staff hired in the second flow of fund which contains the NWO grants. This included the research programmes of Human Capital and Equilibrium, Expectations and Dynamics who administer projects like Scholar, TIER and Cendef all funded by NWO grants. Table I: Input research staff at institutional level INPUT RESAM 2008 fte 2005 2006 2007 2008 WP 1 (first flow of funds, excl. Ph.D.'s) 21,60 19,73 22,60 23,12 WP 2 (second flow of funds, excl. Ph.D.'s) 11,69 12,52 13,27 7,77 WP 3 (third flow of funds, excl. Ph.D.'s) 34,36 36,97 32,49 32,93 Ph.D. students 20,54 16,48 13,95 14,75 Total Research staff 88,19 85,70 82,31 78,57 Support staff RESAM (bureau) 0,60 0,60 0,58 0,80 Total Staff 88,79 86,30 82,89 79,37 Table II shows that trends differ somewhat across research groups. Table II: Input research staff at programme level UvA-Econometrics fte 2005 2006 2007 2008 WP 1 (first flow of funds, excl. Ph.D.'s) 3,09 3,39 4,34 4,24 WP 2 (second flow of funds, excl. Ph.D.'s) 1,61 0,97 0,00 0,00 WP 3 (third flow of funds, excl. Ph.D.'s) 0,00 0,00 0,10 0,10 Ph.D. students 1,80 2,20 2,60 2,30 Total Research staff 6,50 6,56 7,04 6,64 Operations Research & Management fte 2005 2006 2007 2008 WP 1 (first flow of funds, excl. Ph.D.'s) 2,04 2,10 2,10 2,18 WP 2 (second flow of funds, excl. Ph.D.'s) 0,00 0,00 0,00 0,00 WP 3 (third flow of funds, excl. Ph.D.'s) 0,00 0,00 0,00 0,00 Ph.D. students 1,08 1,15 1,22 0,63 Total Research staff 3,12 3,25 3,32 2,81 11

RESAM - Oosterbeek Table II: Input research Staff at programme level (continued) Equilibrium, Expecatations & Dynamics fte 2005 2006 2007 2008 WP 1 (first flow of funds, excl. Ph.D.'s) 2,50 1,50 2,15 2,62 WP 2 (second flow of funds, excl. Ph.D.'s) 1,40 2,03 3,90 1,88 WP 3 (third flow of funds, excl. Ph.D.'s) 0,00 0,00 1,00 0,70 Ph.D. students 1,80 1,90 2,00 2,40 Total Research staff 5,70 5,43 9,05 7,60 Actuarial Science fte 2005 2006 2007 2008 WP 1 (first flow of funds, excl. Ph.D.'s) 0,95 0,95 1,09 1,36 WP 2 (second flow of funds, excl. Ph.D.'s) 0,19 0,39 0,00 0,00 WP 3 (third flow of funds, excl. Ph.D.'s) 0,46 0,52 1,84 1,84 Ph.D. students 1,21 0,72 0,93 1,46 Total Research staff 2,81 2,58 3,86 4,66 Mint fte 2005 2006 2007 2008 WP 1 (first flow of funds, excl. Ph.D.'s) 4,19 3,97 3,66 3,74 WP 2 (second flow of funds, excl. Ph.D.'s) 0,22 0,88 1,87 1,21 WP 3 (third flow of funds, excl. Ph.D.'s) 1,67 1,20 0,46 1,36 Ph.D. students 3,44 2,65 0,52 1,44 Total Research staff 9,52 8,70 6,51 7,75 Human Capital fte 2005 2006 2007 2008 WP 1 (first flow of funds, excl. Ph.D.'s) 2,21 2,18 2,46 2,69 WP 2 (second flow of funds, excl. Ph.D.'s) 3,63 3,81 3,47 1,86 WP 3 (third flow of funds, excl. Ph.D.'s) 1,30 2,32 1,42 1,54 Ph.D. students 5,38 4,08 2,10 1,80 Total Research staff 12,52 12,39 9,45 7,89 History & Methodology of Economics fte 2005 2006 2007 2008 WP 1 (first flow of funds, excl. Ph.D.'s) 2,27 2,33 2,95 2,34 WP 2 (second flow of funds, excl. Ph.D.'s) 1,00 1,00 0,58 0,20 WP 3 (third flow of funds, excl. Ph.D.'s) 0,06 0,00 0,00 0,00 Ph.D. students 0,60 0,60 0,60 0,68 Total Research staff 3,93 3,93 4,13 3,22 Experimental & Political Economcis fte 2005 2006 2007 2008 WP 1 (first flow of funds, excl. Ph.D.'s) 1,98 1,92 2,42 2,83 WP 2 (second flow of funds, excl. Ph.D.'s) 3,64 3,44 3,45 2,62 WP 3 (third flow of funds, excl. Ph.D.'s) 0,25 1,00 1,25 0,25 Ph.D. students 4,43 2,30 3,10 3,98 Total Research staff 10,30 8,66 10,22 9,68 Industrial Org., Competition Pol. & Regulation fte 2005 2006 2007 2008 WP 1 (first flow of funds, excl. Ph.D.'s) 1,57 1,39 1,19 0,88 WP 2 (second flow of funds, excl. Ph.D.'s) 0,00 0,00 0,00 0,00 WP 3 (third flow of funds, excl. Ph.D.'s) 0,15 0,00 0,30 0,90 Ph.D. students 0,00 0,00 0,45 1,08 Total Research staff 1,72 1,39 1,94 2,86 SEO fte 2005 2006 2007 2008 WP 1 (first flow of funds, excl. Ph.D.'s) 0,80 0,00 0,24 0,24 WP 2 (second flow of funds, excl. Ph.D.'s) 0,00 0,00 0,00 0,00 WP 3 (third flow of funds, excl. Ph.D.'s) 30,47 31,93 26,12 26,24 Ph.D. students 0,80 0,88 0,88 0,06 Total Research staff 32,07 32,81 27,24 26,54 12

RESAM - Oosterbeek Most faculty are in the ranks of professor and Ph.D. student (although the number of researchers (oz) is higher than the number of Ph.D. students, but 75% of researchers in table III are working at SEO Economic Research). Overall there seems to be a healthy mix of researchers in different stages of their career, although some programmes might benefit from a more balanced spread in ranks. Table III: Ranks at programme level Research programme Hgl Uhd Ud Oz Pdoc Ph.D. Guest Total # fte # fte # fte # fte # fte # fte # fte # fte UvA- Econometrics 6 1,72 3 0,70 3 1,42 0 0,10 2 0,40 4 2,30 0 0,00 18 6,64 Operations research 3 0,75 2 0,47 2 0,96 - - - - 2 0,63 - - 9 2,81 Equilibrium, expectations & dynamics 1 0,50 3 1,80 5 1,37 - - 4 1,53 6 2,40 4 0,00 21 7,60 Actuarial science 7 1,96 - - 2 0,71 1 0,00 1 0,53 5 1,46 - - 16 4,66 Other research quantitative economics - - 1 0,00 2 0,00 - - - - - - - - 3 0,00 MInt 7 2,23 1 0,50 7^ 1,77^ - - 4 1,71 8 1,44 14 0,10 39 7,75 Human Capital 7 2,48 1 0,50 2 0,67 4 1,84 1 0,60 5 1,80 8 0,00 27 7,89 Methodology & History of Economics 4 0,16 3 1,47 2^ 0,21^ 1 0,70 - - 3 0,68 4 0,00 16 3,22 Experimental & political economics 4 1,83 1 0,50 2 0,92 4 1,45 1 1,00 9 3,98 7 0,00 26 9,68 Industrial org., Competition pol.& Regulation 1 0,10 1 0,50 3 1,18 - - - - 2 1,08 - - 7 2,86 Other research economics 1 0,20 1 0,08 2^ 0,00 1 0,80 1 1,00 1 0,45 2 0,00 9 2,53 SEO economic research 2 1,40 0 0,00 0 0,00 33 25,08 0 0,00 1 0,06 0 0,00 36 26,54 Total 43 13,33 17 6,52 21 7,23 44 29,97 14 6,77 46 16,28 39 0,10 227 82,18 * hgl=professor, uhd=associate professor, ud=assistant professor, oz=researcher, pdoc=postdoctoral fellow ^ Includes docent=lecturer 2.2 RESOURCES, FUNDING AND FACILITIES As can be seen in table IV only a small part of RESAM funds is allocated to non-staff cost centres. Most of this non-staff funding goes to the Tinbergen Institute where it is used to cover the expenses of the MPhil programme, courses for Ph.D. students and the organisation of seminars. Until 2008 RESAM was subsidising SEO Economic Research and AIAS, since this year these obligations have been abolished. Instead RESAM is funding two new projects, namely TIER and ACE. A new item on the RESAM budget is the funding of the research priority area Behavioural Economics. Besides allocating funds to fixed cost-centres to meet obligations made in the past, the remainder of RESAM non-staff funds is distributed over the research programmes. This is done on the basis of the size of the programme (fte). Programme leaders are free to use money for any research related activities of programme members, such as visiting conferences, conducting experiments and collecting data. Figures on actual expenditures of programme funds by research programmes are not very insightful: some programmes save money over several years to cover future expenses, in other programmes RESAM funding is combined with funding from other sources to pay for conference visits or experiments. Besides the direct funding of research programmes, professors who successfully deliver a Ph.D. are granted a bonus. The amount granted depends on how fast the Ph.D. Student finishes his or her dissertation. Dissertations written within 55 months (42 for Ph.Ds with a 3-year appointment) after their appointment are granted twice the standard amount. Funding for reseach programmes has increased slightly in 2009 as well as the budget for paying bonuses to promoters who successfully deliver a Ph.D. In 2006 RESAM has made an effort to concentrate all research-related cost-centres on its budget. From 2009 onwards RESAM will not only have staff of the first flow of fund on its budget but also staff of the second and third flow. This leads to a total increase of around 1.700K in staff costs, which explains the growth of the total budget. In this way a more insightful overview of what fund is allocated to research within the School of Economics can be made. 13

RESAM - Oosterbeek Table IV: RESAM Budget 2008 & 2009 Code Description 2008 2009 Staff means 24200 STAFF RESAM AE 1.995.202 24200 STAFF RESAM KE 1.371.506 1.898.000 24200 VACANCIES WP RESAM AE 183.550 24200 VACANCIES WP RESAM KE 103.709 24200 VACANCIES POSTDOCS 235.703 235.703 24202 Ph.Ds RESAM AE 481.650 426.000 24202 Ph.Ds RESAM KE 172.311 24202 Ph.D. VACANCIES AE 24.616 360.000 24202 Ph.D. VACANCIES KE 24.616 24203 SUPPORT STAFF RESAM 73.000 76.000 Staff Means 2.992.703 4.668.863 Activities 24201 i.a. TINBERGEN INSTITUTE 526.000 526.000 24208 PROMOVENDI 3300 11.000 6.600 24210 PH.D. NETWORKS 3.700 3.700 24212 DATA 15.300 15.300 24213 SEMINARS 4.000 4.000 24214 CONTRIBUTION CenTER TOP40/30 3.000 2.400 24214 OTHER 3.000 3.000 24214 ANNUAL REPORT 1.000 1.000 24215 SUBSIDY CASE - 150.000 24215 SUBSIDY TIER - 200.000 24200 MATCHING NWO PROJECTS 510.000 115.000 24215 SUBSIDY SEO 135.000-24215 SUBSIDY AIAS 80.000 - Activities 1.292.000 1.027.000 Research means R.2420.0001 Industrial Org., Policies & Regulation 5.247 6.066 R.2420.0002 UvA - Econometrics 16.104 12.715 R.2420.0003 Operations Research 6.042 6.117 R.2420.0004 Actuarial Sciences 7.018 14.110 R.2420.0005 Mint 16.944 20.101 R.2420.0006 History and Methodology of Economics 4.883 9.010 R.2420.0007 Human Capital 15.242 24.060 R.2420.0008 Experimental and Political Economics 20.420 22.182 C.2440.0006 Equilibrium, Expectations and Dynamics 18.397 15.736 R.2420.0012 Research Priority 'Behaviour Economics' - 250.000 24211 Promotor Bonus 90.000 100.000 24214 Individual Research means 15.000 13.600 Research means 215.297 493.697 Totaal RESAM 4.500.000 6.189.560 14

RESAM - Oosterbeek CHAPTER 3: CURRENT STATE OF AFFAIRS 3.1 PROCESSES IN RESEARCH, INTERNAL AND EXTERNAL COLLABORATION As explained in previous chapters, RESAM allocates resources on the basis of past performance. RESAM stimulates and facilitates application for external funding (NWO, KNAW, EU). In general, the research institute tries to stimulate an active research environment, by organizing a weekly general seminar (see box II for all RESAM seminars), where participants from all Research Programmes meet, and it tries to assist programme members, when necessary, by providing them with information and administrative support. The overall quality of the various seminar series is good. Especially in the Tinbergen series foreign speakers are usually invited and the debates are lively. Actual research management takes place within the Research Programmes. Decisions on research strategies, research topics, joint work, participation in international networks, publication outlets are all taken within these Programmes, sometimes by the Programme director, but mostly in an informal way by direct communication and interaction within these groups. Research groups are typically small and interaction is frequent, direct and effective. Box II: Seminar series organised in co-operation with RESAM Economics Colloquia Organisation: Sander Onderstal, Jeroen van de Ven, Mikail Anufriev & Aljaz Ule DNB Macro Seminars at the Tinbergen Institute Organisation: Wouter den Haan Tinbergen Institute Econometrics Seminars & Workshops Organisation: Kees Jan van Garderen & Charles Bos KAFEE Lunch seminar Organisation: Jona Linde, Jacopo Mazza, Saeed Mohammadian Moghayer & Markus Kirchner CREED-Tinbergen series in Institutions and Decision Analysis Organisation: Adrian de Groot Ruiz PhD Lunch Seminars Amsterdam Organisation: Zoltan Wolf & Marcelo Tyszler Tinbergen Labour Seminar Series Organisation: Erik Plug, Bas van der Klaauw & Pieter Gautier AIAS lunch seminars Organisation: Kea Tijdens Another way in which RESAM creates a stimulating research environment is by funding and participating in the Tinbergen Institute (TI). Two other Dutch universities (Erasmus University and Free University) participate in the TI. It is their joint graduate school and facilitates exchange amongst its fellows (top researchers of the three participating faculties) by hosting seminar series and publishing a discussion paper series. 15

RESAM - Oosterbeek As a graduate school, the Tinbergen Institute, initiated some major changes in 2003. With the introduction of the Bachelor-Master structure in the Netherlands the TI has chosen to offer a two-year research master (Master of Philosophy in Economics). These two years are basically part of a five-year Ph.D. track. Up until 2005 year most Dutch Ph.D. students started their work after four years of university education. The first year of our Ph.D. students four-year term usually consisted of additional courses at the Tinbergen Institute, which left three years for actual research. The new master is an integration of this old first year together with the last normal university year. Instead of 4-4 track (which usually was a 4-1-3 track) there has now emerged a 3-2-3 system. The advantage of this system is that the new TI-master offers students an excellent research-oriented two-year programme with good opportunities to meet top-level supervisors (TI-fellows). In 2005 an international peer review committee consisting of prof. Dale Jorgenson, prof. David Hendry, prof. Arie Kapteyn, prof. Robert Merton and prof. Torsten Persson judged that the level of instruction in the core courses is comparable to the first-year program in leading graduate schools in economics in the UK and North America. The number of students starting a Ph.D. training within RESAM was uneven in recent years but now seem to stabilize around an annual inflow of around ten. As can be seen from table V, there are major differences between the flows of fund. But in general we see a higher influx of externally funded Ph.Ds. The jump from 2001 to 2002 was due to postponing entry as a result of a new system of financial support 2. The strong drop in 2003, 2004 and 2005 was a consequence of a financial shortage and, since all projects run at least four years, because of the high number of projects started in 2002 that are still weighing down on the budget. The last two years the outflow of students who completed their Mphil at the Tinbergen Institute was sufficient to fill in all of the vacancies, so the shortage 2005 and 2006 did not seem to persist. Table V: Ph.D. Inflow 1998-2008 (RESAM) Cohort 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Average 1st flow of fund projects 9 5 9 1,75 18 2,75 6 1 4,5 4 7 6,2 2nd flow of fund projects - - - 0,25 3-4 - 3 2 4 2,7 3rd flow of fund projects - - - - 0,25 2 1,5 2-1,4 Total projects started 9 5 9 2 21 3 10 3 9 8 11 8,2 Table VI: Ph.D. graduations by cohort (FEB)* Cohort 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Total/Average Projects started 13 11 16 16 15 12 3 28 8 14 136 Graduated/Total 7-13 8-11 12-16 9-16 11-15 7-12 3-3 16-28 2-8 4-14 79/136 Fraction graduated from total 54% 73% 75% 56% 73% 58% 100% 57% 25% 29% 58% Graduated within 60 months 3-7 3-8 10-12 5-9 3-11 3-7 1-3 10-16 4-4 2-2 44/79 Fraction grad. within 60 months 43% 38% 83% 56% 27% 43% 33% 63% 100% 100% 56% Av. duration to completion in m. 67 60 58 65 69 60 65 58 50 49 * Including all FEB Ph.D. students (also those now under the Amsterdam Business School Research Institute) 60 As can be seen in table VI, on average, graduates at the FEB needed 60 months from start of the contract to actual graduation. If a thesis has been accepted by the supervisor, it easily takes four months until actual graduation (6 weeks for the committee to read and react, communication to the dean and the office of the pedel, time to print, etc). Adding queuing time for the auditorium, a lag of up to six months after the expiry date of the contract time is quite normal. Hence, average completion time of 60 months, 2 The bursaal -system was abolished in favor of the AIO -system. In the former system Ph.D. students are not employed by the university but received a scholarship whereas in the latter system the Ph.D. students are employees with concomitant rights and legal positions. 16

RESAM - Oosterbeek compared to a formal minimum of some 54 months is not bad. Reason for real concern is the overall low percentage of graduations (58%). It is, however, expected that this figure will rise when the new system, in which excellent students receive a comprehensive two-year research-training programme before entering the Ph.D., will have become fully operational. If we look at the table VII we see a slightly better figure for the RESAM Ph.Ds. This is partly due to the fact that the relative weight of the most recent years is higher, since they naturally score better because part of these cohorts still has to graduate. Table VII: Ph.D. graduations by cohort (RESAM) Cohort 1998 1999 2000 2001 2002 2003 2004 Total/Average Projects started 9 5 9 2 21 3 10 59 Graduated/Total 6-9 5-5 6-9 2-2 13-21 0-3 3-10 35/59 Fraction graduated from total 67% 100% 67% 100% 62% - 33% 59% Graduated within 60 months 4-6 2-5 2-6 0-2 9-13 0-0 3-3 20/35 Fraction grad. within 60 months 67% 40% 33% 0% 69% - 100 57% Av. duration to completion in m. 60 67 51 68 51-56 56 Box III: Research Highlight: Antoon Pelsser (Actuarial Science) Many modern life-insurance policies specify minimum rate of return guarantees on the capital accumulated during the life of the contract. This and other elements of optionality, such as bonus distribution schemes and surrender possibilities, implicitly represent short positions in financial derivatives and as such are liabilities, which constitute a potential hazard to company solvency. Unfortunately, up to very recent times this hazard has remained unrecognized or ignored; with often catastrophic results for policyholders and insurance company shareholders alike (a set of such cases is given by Grosen and Jørgensen (1999) and Pelsser (2003)). Once the potentially disastrous consequences of mismanaging the risk associated with these implicit options became obvious, the fair valuation of these liabilities became a focus of attention both in the insurance and the accounting professions. In the classical actuarial approach all liabilities are valued by discounting expected payouts with a fixed interest rate. For claims depending on one or few underlying financial variables, this approach fails. Rather, an approach based on arbitrage arguments of the type pioneered by Black and Scholes (1973) is required. Hence fair valuation becomes pricing by arbitrage where the embedded options are concerned. This is, however, not simply an extension of existing valuation results. Given the very long maturity of the products under consideration, in order to be practically meaningful, prices and hedging strategies must take into account a high degree of uncertainty about the true dynamics of the underlying asset ( model risk ). In addition the standard theory of pricing derivatives operates under the assumption that financial markets are complete, i.e. the assumption is made that every payoff can be replicated by executing a (delta-hedging) trading strategy. However, many liabilities on the balance sheet of life-insurance companies and pension funds depend on risks that cannot be fully replicated in financial markets. Hence, the standard theory of derivatives pricing cannot be applied to establish the fair value of this important class of liabilities, unless additional approximations are made (see e.g. Pelsser (2003; 2004) and Pelsser-Schrager (2004)). Ballotta-Haberman (2003), Boyle- Hardy (2003) and Pelsser (2003) study the risk management of guaranteed annuity options which were sold in the UK. The unhedged risk of guaranteed annuity options caused the downfall of a large life-insurance company in the UK (Equitable Life) in 2000. However, all these papers focus on the risk management of the financial risks only, but assume that the actuarial risks are deterministic. Recently, there has emerged a body of literature on the pricing of derivatives in an incomplete market setting. These papers have applied utility-theory to the pricing of derivative contracts on non-traded assets (see the papers by Davis (2003), Musiela- Zariphopoulou (2001; 2004a; 2004b) and Rouge-El Karoui (2000)). So far, only a few authors have applied these ideas to the fair value of insurance and pension contracts (see, Møller (2000; 2003a; 2003b), Young (2002, 2003), Chen-Pelsser-Vellekoop (2008)). 17

RESAM - Oosterbeek 3.2 ACADEMIC REPUTATION Econphd.net publishes rankings (that are quite substantial in scope (covering 63 journals over roughly ten years, 1993-2003)). This ranking deviates from many conventional ones in that an author's entire publication history is attributed to the current affiliation, rather than the affiliation at time of publication. Hence this ranking is not a measure of department productivity over a period of time. It is a measure of current faculty resources. 3 According to these rankings the University of Amsterdam occupies the 37 th position worldwide and the sixth position within Europe. For certain sub-disciplines UvA ranks even higher: for econometrics UvA s rank is 15 worldwide, for macroeconomics is occupies the 22 nd position in the world and for public economics the 24 th. A ranking based on weighted publications exploits only one dimension of research performance. A ranking of European academic institutions in 1999 4, based on articles published in the ten most prestigious international journals from 1991 to 1996, has FEB ranking 17 th. This puts FEB ahead of all other Dutch institutions: Tilburg (19), Maastricht (37), Erasmus (42), Groningen (55), Leiden (58), Nijmegen (81), Utrecht (97) and the Free University (111). Output is not scaled by size of the institute. The top ranking institution (LSE) has published almost 400 AER (American Economic Review) equivalent pages, the top-ten all publish in excess of 140 AER equivalent pages. FEB published 86, Tilburg 80 pages, and all other Dutch institutions below 40 pages. A ranking published in 2003, drawn up for the European Economic Association, puts the FEB at rank 10 in Europe. The ranking covers the period 1995-1999 and is based on thirty prestigious journals 5. Tilburg takes up rank 1 in Europe, Erasmus is at 15, VU at 30, Maastricht at 31 and Groningen at 60. A ranking based on publication in some 650 journals in the period 1994-1998 puts UvA at rank 7 in Europe (Tilburg at 5, EUR at 8, VU at 19, Maastricht at 27 and Groningen at 29) 6. According to comparisons presented in another study, using a more statistical approach and based on list of top journals, FEB held the sixth position of the top European institutes, just behind the University of Oxford 7. In 2008, CentER, the research institute in economics of Tilburg University, again drew up two rankings of Dutch economists and Institutions. First the Top 30 based on citations and secondly a Top 40 based on publications. From both rankings a Top 10 of institutions is derived. In 2008 the FEB was represented by four economists in the Top 30, one less then the year before. Subsequently the UvA fell down one position in the institutional Top 10 and came out third, behind Tilburg University and the Erasmus University Rotterdam. At the end of 2008 the Top 40 was published. In this ranking the FEB was, like in 2007, represented by four economists which all climbed a few positions. The UvA ranked fourth, two positions higher then the year before. Another measure to assess the quality of RESAM s academic reputation is to look at the editorial positions its staff has. Table VIII indicates that many RESAM faculty members take up many positions as editors or associate editors of international journals. Membership of editorial boards is also frequent. 3 http://www.econphd.net/rankings.htm 4 P. Kalaitzidakis, T.P. Mamuneas & T. Stengos (1999). European economics: an analysis based on publications in the core journals, European Economic Review, 43 (4-6), 1150-1168. 5 P. Kalaitzidakis, T. Mamuneas & T. Stengos (2003). Rankings of economic journals and institutions in economics. Journal of the European Economic Association, 1, (6), 1346-1366. 6 http://cwis.kub.nl/~few/few2/nieuws/eurotop.htm 7 M. Lubrano, L. Bauwens, A. Kirman & C. Protopopescu (2003). Ranking Economics Departments in Europe: A Statistical Approach. Journal of the European Economic Association, 1, (6), 1367-1401. 18

RESAM - Oosterbeek Table VIII: Editorial positions in academic international journals Editors Name Editorship Journal Ranking IF Adan, I.J.B.F. Editor Queueing Systems A 0,851 Adan, I.J.B.F. Editor Statistica Neerlandica B 0,317 Adan, I.J.B.F. Editor Mathematical Methods of Operations Research B 0,400 Beetsma, R.M.W.J. Associate editor European Economic Review A 0,944 Beetsma, R.M.W.J. Associate editor CESifo Economic Studies C 0,442 Beetsma, R.M.W.J. Associate editor Journal of Economic Literature A 3,973 Blaug, M. Member editorial board Journal of Economic Methodology B Boumans, M.J. Member editorial board History of Political Economy A Boumans, M.J. Associate editor Journal of Economic Methodology B Boumans, M.J. Co-editor Journal of the History of Economic Thought B Burghouwt, G. Reviewer European Journal of Transport & Infrastructure Research Davis, J.B. Co-editor Journal of Economic Methodology B Davis, J.B. Member editorial board Review of Social Economy Dhaene, J. Associate editor Insurance: Mathematics and Economics A 0,575 Dhaene, J. Member editorial board Astin Bulletin B 0,176 Diks, C.G.H. Associate editor Studies in Nonlinear Dynamics in Econometrics B 0,593 Ellman, M.J. Associate editor Cambridge Journal of Economics B 0,700 Ewijk, C. van Editor De Economist B Gooijer, J.G. de Editor International Journal of Forecasting B 1,409 Gooijer, J.G. de Associate Editor Empirical Economics. B 0,288 Goovaerts, M.J. Editor Insurance: Mathematics and Economics A 0,575 Goovaerts, M.J. Editor Journal of Computational and Applied Mathematics B Goovaerts, M.J. Associate editor Astin Bulletin B 0,176 Goovaerts, M.J. Associate editor Journal of Financial Economics 2,988 Haan, W.J. den Advisory editor Journal of Economic Dynamics and Control A 0,703 Haan, W.J. den Associate editor Journal of Money Credit and Banking A 0,947 Haan, W.J. den Associate editor Economica B 0,500 Hartog, J. Member editorial board Economics of Education Review B 0,557 Hinloopen, J. Member editorial board Review of Industrial Organization B 0,411 Hommes, C. Associate editor Computational Economics B Hommes, C. Editor Journal of Economic Dynamics and Control A 0,703 Hommes, C. Associate editor Macroeconomic Dynamics B 0,453 Hommes, C. Associate editor Nonlinear Science Hommes, C. Associate editor Journal of Economic Behavior & Organization B 0,772 Hommes, C. Associate editorial board Journal of Economic Interaction and Coordination Kaas, R. Managing editor Insurance: Mathematics and Economics A 0,575 Kiviet, J.F. Member editorial board Foundations and Trends in Econometrics Kleibergen, F.R. Associate editor Economics Letters B 0,302 Kuiper, E. Associate editor Feminist Economics B 0,541 Maas, H.B.J.B. Member editorial board History of Political Economy A Maas, H.B.J.B. Member editorial board Journal of Economic Methodology B Morgan, M.S. Member editorial board History of Political Economy A Morgan, M.S. Member editorial board Journal for the History of Economic Thought B Morgan, M.S. Member editorial board Journal of Economic Methodology B Núñez Queija, R. Associate editor Mathematical Methods of Operations Research B 0,400 Núñez Queija, R. Associate editor Operations Research Letters B 0,517 Oosterbeek, H. Member editorial board Economics of Education Review B 0,557 Pelsser, A. Managing Editor International Journal of Theoretical and Applied Finance Ploeg, F. van der Member editorial board Journal of Financial Economic Policy Ploeg, F. van der Member editorial board Oxford Economic Papers B 0,645 Ploeg, F. van der Member editorial board Journal of Economics. B 0,377 Ploeg, F. van der Member editorial board Journal of Cultural Economics. C Ploeg, F. van der Co-editor CESifo Economic Studies C 0,442 Praag, C.M. van Associate editor Small Business Economics B 1,168 Reuten, G.A.T.M. Corresponding editor Capital & Class C Reuten, G.A.T.M. Member advisory board Historical Materialism C Schram, A. Member editorial board Experimental Economics B 1,128 Sonnemans, J. Associate editor European Economic Review A 0,994 Sonnemans, J. Member editorial board Quantitative Finance B 0,824 Sonnemans, J. Member editorial board Journal of Economic Psychology B 0,900 Stel, A.J. van Member editorial board International Journal of Entrepreneurship Education Tuinstra, J. Associate editor Journal of Economic Dynamics and Control A 0,703 Volgenant, A. Advisory editor Computers and Operations Research B Wansbeek, T.J. Associate editor Journal of Econometrics A 1,990 Winden, F.A.A.M. van Member board Public Choice B 0,527 Wit, J.G. de Member editorial board Journal of Air Transport Management B 0,453 Wit, J.G. de Member editorial board Journal of Air Transportation C 19

RESAM - Oosterbeek 3.3 OVERVIEW OF RESULTS Figure II: Number of publications 2002-2008 70 60 50 40 30 20 10 0 2002 2003 2004 2005 2006 2007 2008 7y Average A= publications in A -jounals B=publications in B - journals C=publications in C and other refereed journals B/R=refereed in/of books Table IX: Publications 2002-2008 2002 2003 2004 2005 2006 2007 2008 7y Average A= publications in A -jounals 30 26 23 41 32 19 32 29 B=publications in B - journals 48 63 59 49 64 64 49 57 C=publications in C and other refereed journals 31 14 23 33 34 28 43 29 B/R=refereed in/of books 39 30 37 38 27 31 44 35 Total: 148 133 142 161 157 142 168 150 Figure 2 and Table IX show a steady output of around a 150 publications per year. Although the increase in 2008 was mainly due to a higher amount of C publications and publications in/of books, RESAM was with a total of 168 publications quite successful. The separate output of different programmes is shown in table X. Table X: Aggregated results of the institute Working & Discussion Papers METIS code Research programme Ac.ref (excl. books) Ac.ref (in/of books) Ac.nonref (ex. books) Ac.nonref (in/of book) Prof. publ. Pop. publ. Ph.D. Theses A B C A B C RES - EEM UvA-Econometrics 1 5 0 1 0 0 3 3 7 0 0 0 6,64 RES - OON Operations Research 6 6 3 0 0 1 3 0 13 0 0 1 2,81 RES - E&D Equilibrium, Expectations and Dynamics 4 12 2 1 1 0 0 1 21 2 4 1 7,60 RES - ACT Actuarial Science 4 4 1 2 1 0 8 0 11 7 0 0 4,66 RES - TOE Mint 4 3 9 5 2 1 1 6 27 13 20 2 7,75 RES - HUM Human Capital 1 11 9 0 2 1 5 2 20 5 32 1 7,89 RES - HME History & Methdology of Economics 3 2 3 4 11 0 5 0 4 3 26 0 3,22 RES - EXP Experimental & Political Economics 8 4 0 5 1 1 2 0 30 3 1 0 9,68 RES - ICA Industrial Org., Competition Pol. & Regulation 1 1 4 0 0 0 4 3 17 3 0 0 2,86 SEO - SEO SEO-Amsterdam Economics 0 1 12 0 0 4 72 13 2 17 7 0 26,54 RES - OVO Other Research KE 0 0 0 0 0 0 0 0 0 0 0 0 0,00 RES - OVO Other Research AE 0 0 0 0 0 0 0 0 0 0 0 0 2,53 Total 32 49 43 18 18 8 103 28 152 53 90 5 82,18 Aggregated total 124 44 82,18 Fte WP 1st-3rd FoF 20

RESAM - Oosterbeek Figure III: RESAM Dissertations 20 18 16 14 12 10 8 6 4 2 0 2002 2003 2004 2005 2006 2007 2008 IV III II I *Category I: Ph.D. students who worked at FEB and graduated at FEB, II: external candidates who graduated at FEB, III: FEB staff that graduated elsewhere, IV: non-feb students who graduated elsewhere with a FEB promotor. In comparison to 2007 in which 16 RESAM dissertations where defended, 2008 was not such a successful year. Only 5 RESAM Ph.D. students graduated at the UvA and 2 Non-FEB Ph.D. students graduated with a RESAM promotor. The low output of 2008 was due to the very low input of 2005 (see table V) and there is no reason to suggest that this would persist in the near future. 3.4 RELEVANCE TO SOCIETY Although the main aim of RESAM is to let its research contribute to the international academic discourse, most research done within RESAM programmes contributes in several ways to society at large. Some examples are given here but more detailed information can be found in the programme sections in part B of this report. The Operations Research programme has initiated several projects together with other partners that yield results that are highly valuable to society including a project done together with the national railways and two projects in cooperation with an academic hospital (one on patient care and one on efficient blood storage). The Human Capital research programme participates in TIER, an inter-university top Institute that conducts research in the field of evidence based education. The Top Institute wants to develop knowledge of evidence based education that can be utilised by: 1) the Ministry of Education, Culture and Science in policy preparation and evaluation; 2) the educational practice for example in educational institutions in the allocation of resources and in the decision making process when choosing between educational theories; and 3) parents and students when choosing a school or training. Researchers from the programmes MInt and Actuarial Science have strong ties with NETSPAR (network for studies on pensions, aging and retirement) and their research results will strongly impact the ways in which government and society will deal with the problems in these areas. In addition to the NETSPAR funding MInt has two Ph.Ds financed by De Nederlandsche Bank and one postdoc that is financed by MN Services. 21

RESAM - Oosterbeek Researchers at CREED, furthermore, have done various consultancy work for public and private institutions. One project, for the Ministry of Economic Affairs (EZ) and the Ministry of Health, Well- Being and Sport (VWS) concerned the choice behavior of consumers in insurance markets for health care. Another project, commissioned by the Dutch government and the Municipality of Amsterdam concerns the design of auctions (using game theory and behavioral economics) for auctioning shares to interested parties within the so-called Zuidas-Dok project. Furthermore, a start was made for a new project commissioned by the Dutch Central Bank concerning the interaction between banks. SEO Economic Research carries out contract research for ministries and public organizations, private companies and non-profit institutions, nationally and internationally. SEO distinguishes itself from other research bureaus by its analytical approach. Modern economic analysis is applied to practical issues. Empirical questions are tackled with the econometrics toolkit. Box XX: Research Highlight: Matthijs van Veelen (CREED) My research is divided between two rather different lines; index number theory and the evolution of good and evil. Index number theory Index number theory revolves around numbers that most economic research uses as its starting point. We routinely use measures of inflation and real economic growth, and we usually do so without realizing that these are not numbers that fall out of the sky, or that can only be computed in one natural and straightforward way. The same applies to international or intra-household comparisons of wealth and prices; even if there were no measurement problems, and we would have perfectly clean disaggregated data at our disposal, these comparisons can still be made in many different ways. The aim of index number theory is to compute inflation rates and real growth figures or in general: to compare wealth and overall price levels in such a way that these numbers are as meaningful as possible. This also implies that once we have chosen one way of computing real growth for instance then index number theory points out what the limitations of those measures are. The evolution of good and evil I spend most of my research time on the evolution of pro- and antisocial behaviour in humans. The central question is: how did humans come to deviate from complete indifference to the fate of others? This is a question that perhaps falls within the domain of biology, but at CREED we use laboratory experiments to study the behaviour of this particular species we call our own, and for those experiments it can be helpful to realize that human behaviour also evolved by means of mutation and selection. Especially when it comes to other-regarding behaviour, it can make a lot of sense to draw our hypotheses from evolutionary models. Having a background in econometrics and game theory turns out to be really helpful when crossing over to theoretical biology. Many of the models that are suggested in the biology literature are interesting and worth exploring as ideas already, but I firmly believe that technical rigour is the key to a deeper understanding of why and how selection works. Therefore most of my papers on these topics combine technical ingredients with conceptual issues. In 2008 I worked mostly on a way to unite group selection models with inclusive fitness accounting, and on evolution in repeated games. Group selection is a (heatedly debated) explanation for altruism, and computing inclusive fitness is a way of making predictions that is associated with kin selection, which in turn is regularly regarded as a different type of model. Concerning the evolution of behaviour in repeated games, we found that instability is the key to understand evolution, rather than stability, which is what we game theorists usually focus on. 22