nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2005‒06‒14
three papers chosen by
Matthew Baker
US Naval Academy, USA

  1. Is It Trust we Model? An Attempt to Calculate the Non-Calculative By Rosenkranz, Stephanie; Weitzel, Utz
  2. Investor Attention: Overconfidence and Category Learning By Lin Peng; Wei Xiong
  3. Do experimental subjects favor their friends? By Pablo Brañas-Garza; Miguel Angel Durán; María Paz Espinosa

  1. By: Rosenkranz, Stephanie; Weitzel, Utz
    Abstract: In this paper we characterize a situation in which non-calculative trust has to play a role in the decision to cooperate. We then analyse the given situation in game theoretical terms and distinguish those aspects of players’ decisions that are cooperative from those that may be interpreted as being trustful. We argue that the cooperative aspect relates to incentives while the trustful (and thus non-calculative) aspect of the decision is related to the framing of the situation.
    Keywords: alliances; cooperation; focal points; framing; trust
    JEL: C72 D74 D80 Z13
    Date: 2005–05
  2. By: Lin Peng; Wei Xiong
    Abstract: Motivated by psychological evidence that attention is a scarce cognitive resource, we model investors' attention allocation in learning and study the effects of this on asset-price dynamics. We show that limited investor attention leads to ``category-learning" behavior, i.e., investors tend to process more market and sector-wide information than firm-specific information. This endogenous structure of information, when combined with investor overconfidence, generates important features observed in return comovement that are otherwise difficult to explain with standard rational expectations models. Our model also demonstrates new cross-sectional implications for return predictability.
    JEL: G0 G1
    Date: 2005–06
  3. By: Pablo Brañas-Garza (Department of Economic Theory and Economic History, University of Granada); Miguel Angel Durán (Department of Economic Theory and Economic History, University of Granada); María Paz Espinosa (Universidad del País Vasco)
    Abstract: Ideally we would like subjects of experiments to be perfect strangers so that the situation they face at the lab is not just a part of a long run interaction. Unfortunately, it is not easy to reach those conditions and experimenters try to mitigate any effects coming form these out-of- the-lab relationships by, for instance, randomly matching subjects. However, even if this type of procedure is used, there is a positive probability that a subject faces a friend or an acquaintance. We find evidence that social proximity among subjects is irrelevant for experiments’ results in dictator games. Thus, although ideal conditions are not met, relations among subjects are not contaminating the experiments’ results.
    Keywords: experimental procedures, friendship effect, dictator game, fairness.
    JEL: C99 D63 D64
    Date: 2005–06–08

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