nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2005‒07‒11
five papers chosen by
Matthew Baker
US Naval Academy, USA

  1. An explorative analysis of the links between learning behavior and change orientation By Sluis, Lidewey van der; Caluwe, Leon de; Nistelrooij, Antonie van
  2. Evolutionary Dynamics and a Refinement of the Neutral Stability Criterion By Torstensson, Pär
  3. Evolutionary Stability in Bargaining with an Asymmetric Breakdown Point By Torstensson, Pär
  4. From Bounded Rationality to Behavioral Economics By Massimo Egidi
  5. Risk Perceptions and Attitudes By Miroslav Misina

  1. By: Sluis, Lidewey van der (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics); Caluwe, Leon de; Nistelrooij, Antonie van
    Abstract: The article presents an explorative study on the links between learning behavior and change orientation of individuals. When reading literature on how to develop employees and organizations, it strikes one how less focus there is on learning and change needs of individuals. This paper deals with this missing notion by detecting the learning behavior of employees and the change orientation of individuals in organizations. We explored the interconnections between these two individual developmental characteristics. From our pilot study can be suggested that learning behavior and change orientation are linked with eachother based on two distinguished dimensions; a prospective orientation and a reflective orientation. We argue that managing learning or change in organisations should be in line with the dominant learning and change orientations of the employees. Given the need for a reflective change program, interventions should be made to stimulate learning behavior and thinking about change in the direction of reflection. The same holds for situations in which there is a need for a prospective change program. Based on these insights, the article outlines a research agenda and researchable questions in the field of learning and change in organizations.
    Keywords: Learning behaviour; Change orientation; Organization development
    Date: 2005
  2. By: Torstensson, Pär (Department of Economics, Lund University)
    Abstract: We introduce two refinements of the neutral stability criterion, namely the ascending and the eroding neutrally stable strategies (NSS). These criteria take into account how well the NSS preform against all pure strategies in symmetric two-player games. We also present a dynamic model which supports the refinements.
    Keywords: Evolutionary dynamics; Neutrally stable strategies; ascending NSS; Eroding NSS.
    JEL: C73
    Date: 2005–05–10
  3. By: Torstensson, Pär (Department of Economics, Lund University)
    Abstract: We study an asymmetric two-player bargaining game with risk of breakdown and no discounting. We characterize the modified evolutionarily stable strategies (MESS) by modelling strategies as automata. Payoff and complexity considerations are taken in the automata-selection process. We show that a MESS exists in the bargaining game and that agreement is reached immediately. It turns out that in the search for evolutionary foundation, we find support for all partitions that assigns the positive breakdown utility x or more to the player with the higher breakdown utility, given that it exceeds half the surplus.
    Keywords: Modified evolutionary stable strategies; bargaining; automata; asymmetric breakdown point.
    JEL: C72 C73 C78
    Date: 2005–06–15
  4. By: Massimo Egidi (CEEL University of Trento)
    Abstract: The paper provides an brief overview of the “state of the art” in the theory of rational decision making since the 1950’s, and focuses specially on the evolutionary justification of rationality. It is claimed that this justification, and more generally the economic methodology inherited from the Chicago school, becomes untenable once taking into account Kauffman’s Nk model, showing that if evolution it is based on trial-and-error search process, it leads generally to sub- optimal stable solutions: the ‘as if’ justification of perfect rationality proves therefore to be a fallacious metaphor. The normative interpretation of decision-making theory is therefore questioned, and the two challenging views against this approach , Simon’s bounded rationality and Allais’ criticism to expected utility theory are discussed. On this ground it is shown that the cognitive characteristics of choice processes are becoming more and more important for explanation of economic behavior and of deviations from rationality. In particular, according to Kahneman’s Nobel Lecture, it is suggested that the distinction between two types of cognitive processes – the effortful process of deliberate reasoning on the one hand, and the automatic process of unconscious intuition on the other – can provide a different map with which to explain a broad class of deviations from pure ‘olympian’ rationality. This view requires re-establishing and revising connections between psychology and economics: an on-going challenge against the normative approach to economic methodology.
    Keywords: Bounded Rationality, Behavioral Economics, Evolution, As If
    JEL: C9
    Date: 2005–07–08
  5. By: Miroslav Misina (Bank of Canada)
    Abstract: Changes in risk perception have been used in various contexts to explain shorter-term developments in financial markets, as part of a mechanism that amplifies fluctuations in financial markets, as well as in accounts of “irrational exuberance.” This approach holds that changes in risk perception affect actions undertaken in risky situations, and create a discrepancy between the risk attitude implied by those actions and the a priori description of risk attitude as summarized by the Arrow-Pratt coefficients of risk aversion. The author characterizes this discrepancy by introducing the notion of risk perception within the expected utility theory, and proposes the concept of implied risk aversion as a summary measure of risk attitudes implied by agents’ actions. Properties of implied risk aversion are related to an individual’s future outlook. Key ideas are illustrated using an asset-pricing model.
    Keywords: risk attitudes, risk perception, expectations, asset prices
    JEL: D81 D84 G12
    Date: 2005–07–08

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