nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2005‒01‒23
six papers chosen by
Marco Novarese
Università del Piemonte Orientale

  1. Evolutionary Theories of Cultural Change: An Empirical Perspective By R. R. Nelson
  2. Free to Trust? Economic Freedom and Social Capital By Berggren, Niclas; Jordahl, Henrik
  3. Economic and Hypothetical Dictator Game Experiments: Incentive Effects at the Individual Level By Avner Ben-Ner; Ori Levy
  4. Science-Technology-Industry Links and the ”European Paradox”: Some Notes on the Dynamics of Scientific and Technological Research in Europe By Giovanni Dosi, Patrick Llerena, Mauro Sylos Labini
  5. Social Interactions and Economic Behavior By Giulio Zanella
  6. An Experimental Study of the Effects of Inequality and Relative Deprivation on Trusting Behavior By Lisa R. Anderson; Jennifer M. Mellor; Jeffrey Milyo

  1. By: R. R. Nelson
    Abstract: The last quarter century has seen a renaissance of the proposal that the processes Darwin put forth as driving biological evolution also provide a plausible theoretical framework for analysis of the evolution of human culture. Modern proponents of the idea that human culture evolves through broad Darwinian processes, involving variation and selective retention, of course recognize that the idea is not a new one. There is no doubt, however, that in recent years the idea has become particularly fashionable among scholars. Many advocates of the position use the term "Universal Darwinism", generally believed to have been coined by Richard Dawkins (1983), to denote the theory they are trying to develop. Because it is better known, in what follows I will use that term to denote the broad idea, which I endorse, rather adopting here David Hull’s term "General Selection Processes" (1988) to denote the class of dynamic mechanisms one can see operative in particular form in both biological and cultural change. However, I share with Hull the belief that many of the recent attempts to extend Darwinian theory to human culture have stayed too close to biology, and indeed a narrow perspective on biology. In particular, my concern here is that, while a general theory of evolution driven by variation and selective retention would appear highly relevant to analysis of changes over time in many aspects of human culture, some of the specific features that we now know are involved in the evolution of species, particularly entities like genes, and mechanisms like inclusive fitness, may not carry over easily.
  2. By: Berggren, Niclas (The Ratio Institute); Jordahl, Henrik (Uppsala University)
    Abstract: We present new evidence on how generalized trust is formed. Unlike previous studies, we look at the explanatory power of economic institutions, we use newer data, we incorporate more countries, and we use instrumental variables to handle the causality problem. A central result is that legal structure and security of property rights (area 2 of the Economic Freedom Index) increase trust. The idea is that a market economy, building on voluntary transactions and interactions with both friends and strangers within the predictability provided by the rule of law, entails both incentives and mechanisms for trust to emerge between people.
    Keywords: social capital; trust; economic freedom; rule of law; property rights; legal system
    JEL: K42 O40 Z13
    Date: 2005–01–14
  3. By: Avner Ben-Ner; Ori Levy
    Abstract: The paper compares behavior in economic dictator game experiments played with actual money (amounts given by "dictator" subjects) with behavior in hypothetical dictator game experiments where subjects indicate what they would give, although no money is actually exchanged. The average amounts transferred in the two experiments are remarkably similar. Moreover, we uncover meaningful individual differences in real and hypothetical allocations and demonstrate the importance of two personality traits - agreeableness and extraversion - in reconciling them. We conclude that extraverts are "all talk;" agreeable subjects are "for real."
    Keywords: Dictator Game, Incentives, Individual Differences, Personality
    JEL: C91 D81
  4. By: Giovanni Dosi, Patrick Llerena, Mauro Sylos Labini
    Abstract: This paper discusses, first, the properties of scientific and technological knowledge and the institutions supporting its generation and its economic applications. The evidence continues to support the broad interpretation which we call the "Stanford-Yale-Sussex" synthesis. Second, such patterns bear important implications with respect to the so-called "European Paradox", i.e. the conjecture that EU countries play a leading global role in terms of top-level scientific output, but lag behind in the ability of converting this strength into wealth-generating innovations. The bottom line is that European weaknesses reside both in its system of scientific research and in a relatively weak industry. The final part of the work suggests a few normative implications: much less emphasis should be put on various types of "networking" and much more on policy measures aimed to both strengthen "frontier" research and strengthen European corporate actors.
    Keywords: Open Science, European Paradox, Science and Technology Policy.
  5. By: Giulio Zanella
    Abstract: This paper is a critical introduction to the new wave of economic literature on the effect of social interactions on individual behavior and aggregate economic outcomes. I refer to this research program, also known as new social economics, as the socioeconomic analysis of behavior, to distinguish it from the more popular economic analysis of social behavior. I discuss the main features of so-called interactions-based models, and I show how they help us to understand substantive economic phenomena. In order to restrict the focus, I choose five possible applications: matching in the labor market, welfare participation, poverty traps and inequality, investor behavior, and consumer behavior. Then I dwell upon two key undecided questions: (i) why economic behavior is affected by social interactions, and (ii) how the social context is shaped by rational individuals. Finally, I briefly discuss the main empirical routes so far used.
    Keywords: new social economics, social interactions, neighborhood effects, social networks, social norms, social multiplier
    JEL: D10 D85 Z13
    Date: 2004–11
  6. By: Lisa R. Anderson (Department of Economics, College of William and Mary); Jennifer M. Mellor (Department of Economics, College of William and Mary); Jeffrey Milyo (Department of Economics and Truman School of Public Affairs, University of Missouri)
    Abstract: Several non-experimental studies report that income inequality and other forms of population-based heterogeneity reduce levels of trust in society. However, recent work by Glaeser et al. (2000) calls into question the reliability of widely used survey-based measures of trust. Specifically, survey responses regarding trust attitudes did not reflect subjects' actual behavior in a trust game. In this paper, we conduct a novel experimental test of the effects of inequality on trust and trustworthiness. Our experimental design induces inequality by varying the show-up fees paid to subjects, in contrast to previous experiments that focus on broad cultural or national differences in trust. We do not find robust support for the hypothesis that inequality per se dampens trusting behavior among all subjects; however, we do find some evidence that trust and trustworthiness are influenced by an individual's relative position in the group. Finally, we confirm previous findings that common survey-based measures of social trust are not associated with actual trusting behavior.
    Keywords: Trust, social capital, heterogeneity, inequality, experiment
    JEL: C9 Z13
    Date: 2005–01–13

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