No Home Bias in Ghost Games

Because of the COVID-19-pandemic the men’s first German football league (Bundesliga) had to take a break before it was permitted to finish the season 2019/20. However, only ghost games without spectators in the stadiums were allowed in this finishing phase. Comparing these 83 games without spectators with the corresponding 83 regular games between the same teams with spectators before, we find that the normal advantage for the home team disappears. There were 48.2% home wins with spectators and only 32.5% without. This decrease is statistically significant. There were 32.5% away wins before the break and 44.6% thereafter, while the draws increased from 19.3% to 22.9%. However, these increases are not statistically significant. One reason for the lost home advantage is the disappearance of a home bias by the referees, who gave significantly less extra time and also less yellow and red cards to the away team. Keywords: Bundesliga, COVID-19, football, ghost games, home bias

Dynamic Tax Competition, Home Bias and the gain from Non-preferential Taxation Regimes: A case for unilateral commitment

A country has an incentive to unilaterally commit to a non-preferential taxation regime even though the competitor adopts a preferential taxation regime. We show that a mixed taxation regime arises in a dynamic two-period model of tax competition between two symmetric countries where an investor has home-bias for the country where he/she invests in the initial period. A scenario where competing countries jointly adopt non-preferential taxation regimes is also a subgame-perfect equilibrium. The tax revenue of the country which adopts a preferential taxation regime in a mixed taxation regime is equal to the tax revenue a country receives when competing countries jointly adopt a non-preferential taxation regime.JEL classification: F21; H21; H25; H87

Equity home bias and consumption-real exchange rate puzzles: A joint solution

In a standard dynamic stochastic general equilibrium model with a complete asset market, home agents should hold a foreign equity biased portfolio to hedge the non-traded labor income risk, which contradicts home equity biased portfolios observed worldwide. As the labor income share increases, the degree of home bias should decrease because there is more incentive to hold foreign equity. In the data, there is not any evidence that the labor income share and the degree of home bias are negatively correlated. The standard model also predicts that the consumption differential-real exchange rate correlation is positive, while it is negative in the data. I show that a combination of market incompleteness, non-tradable goods, and labor supply can explain the three features above. My model can generate a large equity home bias, despite the strong positive correlation of non-traded human capital return with domestic equity return. The home bias is not sensitive to the labor income share. The consumption differential-real exchange rate unconditional correlation generated by my model simulation is zero.

The Nearer, the Better? The Impact of Cultural and Geographic Distance on Crowdfunding Project Attractiveness

Information asymmetry between backers and project creators impedes the crowdfunding success. Consequently, creators usually rely on various information to alleviate information asymmetry. Particularly, the location information of both backers and creators embodies their geographic and cultural distance, which may affect crowdfunding project attractiveness. Whereas current literature almost ignores the role cultural distance in crowdfunding, this research focuses on the reward-based crowdfunding, so that it becomes salient to form the appreciation and judgment of the innovative, creative, or artistic nature of projects. Meanwhile, geographic distance is examined to join the debates between flat world hypothesis and home bias proposition. A series of econometric models are examined based on a sample of 264 fundraising projects collected from Kitckstarter.com through Python program. Results show that cultural distance exerts a U-shape effect, which initially impedes the crowdfunding performance but promote projects when large enough. Geographic distance generally exerts insignificant impact on crowdfunding performance. Furthermore, cultural and geographic distance exerts the asymmetric effects on experienced versus new backers. This article underscores the important implications of cultural distance on reward-based crowdfunding. By showing the differential effects of cultural and geographic distance on experience versus new backers, it empirically infers the social capital as the underlying mechanism.