nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2006‒07‒02
three papers chosen by
Marco Novarese
Universita del Piemonte Orientale

  1. Is It Just Legitimacy of Endowments? An Experimental Analysis of Unilateral Giving By Luigi Mittone; Matteo Ploner
  2. A Naturalistic Approach to the Theory of the Firm: The Role of Cooperation and Cultural Evolution By C. Cordes; P. J. Richerson; R. McElreath; P. Strimling
  3. Evolutionary Economics By U. Witt

  1. By: Luigi Mittone; Matteo Ploner
    Abstract: Deviations from standard game theoretical predictions have been repeatedly observed in basic Dictator Games. Different interpretations have been provided to these deviations. On the one hand, empirical (among others, Forsythe et al., 1994) and theoretical works (among others, Bolton and Ockenfels, 2000; Fehr and Schmidt, 1999) have adopted the explanation based on other-regarding concerns. On the other hand, potential weaknesses in standard design of the game have been stressed. Evidence collected shows that when controlling for reputation considerations (Hoffman et al., 1996) and for legitimacy of assets (Cherry et al., 2002) behavior observed in the experiments is very close to that predicted by standard game theory. Results from our experiment suggest that the relevance of these two factors in explaining observed behavior may be overestimated by previous contributions. Relevant deviations from selfish equilibrium are registered in a condition of full-anonymity when assets to be shared are earned by the dictators and, simultaneously, recipients are allowed to work without being rewarded for their effort.
    Date: 2006
  2. By: C. Cordes; P. J. Richerson; R. McElreath; P. Strimling
    Abstract: One reason why firms exist, this paper argues, is because they are suitable organizations within which cooperative production systems based on human social predispositions can evolve. In addition, we show how an entrepreneur – given these predispositions – can shape human behavior within a firm. To illustrate these processes, we will present a model that depicts how the biased transmission of cultural contents via social learning processes within the firm influence employees’ behavior and the performance of the firm. These biases can be traced back to evolved social predispositions. Humans lived in tribal scale social systems based on significant amounts of intra- and even intergroup cooperation for tens if not a few hundred thousand years before the first complex societies arose. Firms rest upon the social psychology originally evolved for tribal life. We also relate our conclusions to empirical evidence on the performance and size of different kinds of organizations. Modern organizations have functions rather different from ancient tribes, leading to friction between our social predispositions and organization goals. Firms that manage to reduce this friction will tend to function better.
    Keywords: Theory of the Firm, Cultural Evolution, Entrepreneurship, Firm Performance, Cooperation
    JEL: L25 D21 M13 M14 C61
    Date: 2006–06
  3. By: U. Witt
    Abstract: This paper reviews the way of thinking about economic problems and the research agenda associated with the evolutionary approach to economics. The general focus of this approach is on the processes that transform the economy from within and on their consequences for firms and industries, production, trade, employment and growth. The entry highlights the major contributions to evolutionary economics and explains its key concepts together with some of their implications.
    Date: 2006–06

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