nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2005‒05‒29
three papers chosen by
Matthew Baker
US Naval Academy, USA

  1. Individual Behavior and Beliefs in Experimental Parimutuel Betting Markets By Frederic Koessler; Charles Noussair; Anthony Ziegelmeyer
  2. Variety and the evolution of refinery processing By Nguyen, P.; Saviotti, P.P.; Trommetter, M.; Bourgeois, B.
  3. I do not play lotteries By Pablo Brañas Garza; Nikolaos Georgantzis; Pablo Guillen

  1. By: Frederic Koessler; Charles Noussair; Anthony Ziegelmeyer
    Abstract: We study experimental parimutuel betting markets with asymmetrically informed bettors. We propose a theoretical model, the Adaptive Model, which serves as our source of null hypotheses about individual behavior and the capacity of the markets to aggregate information. In one treatment, groups of eight participants bet against each other in twenty repetitions of a sequential betting market. The second treatment is identical, except that bets are observed by other participants who assess the winning probabilities of each outcome. In the third treatment, the same individuals place bets and assess the winning probabilities of the outcomes. A favorite-longshot bias is observed in the first and second treatments, but it is sharply reduced in the third treatment. Information aggregation is better in the third than in the other two treatments, because contrarian betting is almost completely eliminated by the belief elicitation procedure. Placing bets improves the accuracy of belief statements. A statistical generalization of the Adaptive Model explains the data very effectively.
    Keywords: belief elicitation, information aggregation, parimutuel betting, experiment
    JEL: C90 C91 C92 D40 D8 D82
  2. By: Nguyen, P.; Saviotti, P.P.; Trommetter, M.; Bourgeois, B.
    Abstract: Evolutionary theories of economic development stress the role of variety as both a determinant and a result of growth. In this paper we develop a measure of variety, based on Weitzman's maximum likelihood procedure. This measure is based on the distance between products, and indicates the degree of differentiation of a product population. We propose a generic method, which permits to regroup the products with very similar characteristics values before choosing randomly the product models to be used to calculate Weitzman's measure. We apply the variety measure to process characteristics of oil refining. The results obtained for this technology show classic evolutionary specialization patterns that can be understood on the basis of niche theory. Here the changes in variety are related to changes in the range of the services the technology considered can deliver, range which plays a role similar to that of the size of the habitat of a biological species.
    JEL: L15 L93 Q40
    Date: 2004
  3. By: Pablo Brañas Garza (Department of Economic Theory and Economic History, University of Granada); Nikolaos Georgantzis (Universidad Jaume I); Pablo Guillen (Harvard Business School)
    Abstract: We study individual decision making in a lottery-choice task performed by three subject populations: gamblers under psychological treatment (“addicts”), gamblers’ relatives (“victims”), and normal (as far as gambling is considered) individuals. We find that addicts are willing to take less risk than normal individuals, but the large majority of victims reports themselves unwilling to take any risk at all. Furthermore, both addicts and victims maintain their choices invariant across di fferent scenarios concerning the risk-return tradeoff.
    Keywords: risky decision making, pathological gambling, attraction and re-pulsion to chance.
    JEL: C91
    Date: 2005–05–16

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