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on Evolutionary Economics |
| By: | Thomas Brenner |
| Abstract: | This paper presents an overview on the existing learning models in the economic literature. Furthermore, it discusses which of these models should be used under what circumstances and how adequate learning models can be chosen in simulation approaches. It gives advice for getting along with the many models existing and picking the right one for the own application. |
| URL: | http://d.repec.org/n?u=RePEc:esi:evopap:2004-16&r=evo |
| By: | Gorobets, A.; Nooteboom, B. (Erasmus Research Institute of Management (ERIM), Erasmus University Rotterdam) |
| Abstract: | This paper employs the methodology of Agent-Based Computational Economics (ACE) to investigate under what conditions trust can be viable in markets. The emergence and breakdown of trust is modeled in a context of multiple buyers and suppliers. Agents adapt their trust in a partner, the weight they attach to trust relative to profitability, and their own trustworthiness, modeled as a threshold of defection. Adaptation occurs on the basis of realized profit. Trust turns out to be viable under fairly general conditions. |
| Keywords: | Agent-based computational economics;transaction costs;trust; |
| Date: | 2005–01–03 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureri:30001988&r=evo |
| By: | Thorsten Chmura; Thomas Pitz |
| Abstract: | The paper reports simulations applied on two similar congestion games: the first is the classical minority game. The second one is a asymmetric variation of the minority game with linear payoff functions. For each game simulation results based on an extended reinforcement algorithm are compared with real experimental statistics. It is shown that the extension of the reinforcement model is essential for fitting the experimental data and estimating the players behaviour. |
| Keywords: | congestion game, minority game, laboratory experiments, reinforcement algorithm, payoff sum model |
| JEL: | C91 C92 C15 R4 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:bon:bonedp:bgse24_2004&r=evo |
| By: | Dorothea K. Herreiner; Clemens Puppe |
| Abstract: | In the recent experimental literature several social preference models have been suggested that address observed behavior not reducible to the pursuit of self-interest. Inequality aversion is one such model where preferences are distributional. Frequently, envy is suggested as the underlying rationale for inequality aversion. Envy is a central criterion in the theoretical literature on fair division, whose definition (Foley 1967) differs from the more casual use of the word in the experimental literature. We present and discuss results from free-form bargaining experiments on fair division problems where the role of envy in Foley’s sense can be analyzed and compared to social preferences. We find that envy freeness does matter as a secondary criterion. |
| Keywords: | Fairness, Envy Freeness, Social Preferences, Bargaining |
| JEL: | A13 C78 C91 D63 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:bon:bonedp:bgse28_2004&r=evo |
| By: | Josef Falkinger |
| Abstract: | In small groups norm enforcement is provided by mutual punishment and reward. In large societies we have enforcement institutions. This paper shows how such institutions can emerge as a decentralized equilibrium. In a first stage, individuals invest in a public enforcement technology. This technology generates a sanctioning system whose effectiveness depends on the aggregate amount of invested resources. In a second stage, in which individuals contribute to the provision of a public good, the sanctioning system imposes penalties and rewards on deviations from the endogenous norm contribution. It is shown that even if group size goes to infinity public norm enforcement is supported in a noncooperative equilibrium. Psychological factors are not necessary but can be favorable for the emergence of effective public norm enforcement. |
| Keywords: | norm enforcement, public goods, institutions, sanctioning |
| JEL: | H41 K40 Z13 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1368&r=evo |
| By: | Heimeriks, K. (Ecis, Technische Universiteit Eindhoven); Duysters, G.M. (Ecis, Technische Universiteit Eindhoven); Vanhaverbeke, W.P.M. (Ecis, Technische Universiteit Eindhoven) |
| Keywords: | evolution, alliance |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:tuecis:0420&r=evo |
| By: | David Goldreich (London Business School and CEPR) |
| Abstract: | This paper provides evidence of bounded rationality by large dealers in U.S. Treasury auctions. I argue that these dealers use a heuristic of yield-space bidding which leads to biases manifested in three ways: they submit dominated bids, i.e., those that could be improved without raising the bidding price; they bid in a manner that disregards the unevenly spaced price grid; and they round bids in yield space. Consistent with bounded rationality, I show that bidders are less susceptible to bias when the cost of suboptimal bidding is high. While the literature provides substantial evidence of behavioral biases among individual investors, they are less well documented for large sophisticated institutions that are likely to be important for setting asset prices. These primary bond dealers who regularly bid for billions of dollars in Treasury bill auctions are precisely such economic agents. |
| Keywords: | Treasury auctions, Behavioral finance |
| JEL: | H63 H74 D44 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2004.143&r=evo |
| By: | Engseld, Peter (Department of Economics, Lund University); Bergh, Andreas (Department of Economics, Lund University) |
| Abstract: | We analyze a cooperation game and a coordination game in an evolutionary environment. Agents make noisy observations of opponent's propensity to play dove, called reputation, and form preferences over opponents based on their reputation. A game takes place when two agents agree to play. Socially optimal cooperation is evolutionary stable when reputation perfectly reflects propensity to cooperate. With some reputation noise, there will be at least some cooperation. If reputation is noisy enough, there is no cooperation in equilibrium. In the coordination game, the efficient equilibrium is chosen and agents with better skills to observe reputation earn more |
| Keywords: | Cooperation; Coordination; Prisoners Dilemma; Signaling; Reputation; Evolutionary Games; Evolutionary Equilibrium |
| JEL: | C70 C72 |
| Date: | 2005–01–04 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2005_001&r=evo |
| By: | Prof John Foster (School of Economics, The University of Queensland) |
| Abstract: | The applicability of complex systems theory in economics is evaluated and compared with standard approaches to economic theorizing based upon constrained optimization. A complex system is defined in the economic context and differentiated from complex systems in physio-chemical and biological settings. It is explained why it is necessary to approach economic analysis from a network, rather than a production and utility function perspective, when we are dealing with complex systems. It is argued that much of heterodox thought, particularly in neo-Schumpeterian and neo-Austrian evolutionary economics, can be placed within a complex systems perspective upon the economy. The challenge is to replace prevailing 'simplistic' theories, based in constrained optimization, with 'simple' theories, derived from network representations in which value is created through the establishment of new connections between elements. |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uq2004:335&r=evo |