nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2005‒12‒01
five papers chosen by
Matthew Baker
US Naval Academy, USA

  1. The Evolutionary Stability of Optimism, Pessimism and Complete Ignorance By Burkhard C. Schipper
  2. The Choice of the Agenda in Labor Negotiations: efficiency and behavioral considerations By Marie-Claire Villeval; Manfred Konigstein
  3. Crime, punishment and social norms By Weibull, Jörgen; Villa, Edgar
  4. Learning in Games with Unstable Equilibria By Michel Benaim; Josef Hofbauer; Ed Hopkins
  5. Can Wages Signal Kindness? By Emrah Arbak; Laurence Kranich

  1. By: Burkhard C. Schipper (Department of Economics, University of California, Davis, One Shields Avenue, Davis, CA 95616, USA.
    Abstract: We provide an evolutionary foundation to evidence that in some situations humans maintain optimistic or pessimistic attitudes towards uncertainty and are ignorant to relevant aspects of the environment. Players in strategic games face Knightian uncertainty about opponents’ actions and maximize individually their Choquet expected utility. Our Choquet expected utility model allows for both an optimistic or pessimistic attitude towards uncertainty as well as ignorance to strategic dependencies. An optimist (resp. pessimist) overweights good (resp. bad) outcomes. A complete ignorant never reacts to opponents’ change of actions. With qualifications we show that optimistic (resp. pessimistic) complete ignorance is evolutionary stable / yields a strategic advantage in submodular (resp. supermodular) games with aggregate externalities. Moreover, this evolutionary stable preference leads to Walrasian behavior in those classes of games.
    Keywords: ambiguity, Knightian uncertainty, Choquet expected utility, neo-additive capacity, Hurwicz criterion, Maximin, Minimax, Ellsberg paradox, overconfidence, supermodularity, aggregative games, monotone comparative statics, playing the field, evolution of preferences
    JEL: C72 C73 D43 D81 L13
    Date: 2005–11
  2. By: Marie-Claire Villeval (GATE CNRS); Manfred Konigstein
    Abstract: The labor economics literature has shown that the “efficient bargaining” model, in which wage and employment are negotiated simultaneously, is less frequently used on unionized markets than the less efficient “right-to-manage” model, in which wage is determined via bargaining and employment determined subsequently and unilaterally by the firm. This paper reports an experiment in which the choice of the bargaining agenda is endogenous within a noncooperative game. We find that participants show a preference for decision authority and choose single-issue bargaining in most cases even though efficiency is lower than in multi-issue bargaining. Furthermore, multi-issue bargaining induces unions to offer smaller payoff shares and leads to a higher conflict rate than in a single-issue bargaining.
    Keywords: Bargaining agenda, Efficient contracts, Right-to manage, Decision authority, Experiments
    JEL: C72 C78 C91 J51 J53
    Date: 2005–11
  3. By: Weibull, Jörgen (Dept. of Economics, Stockholm School of Economics); Villa, Edgar (Boston University)
    Abstract: We analyze the interplay between economic incentives and social norms when individuals decide whether or not to engage in criminal activity. More specifically, we assume that there is a social norm against criminal activity and that deviations from the norm result in feelings of guilt or shame. The intensity of these feelings is here endogenous in the sense that they are stronger when the population fraction obeying the norm is larger. As a consequence, a gradual reduction of the sanctions against criminal activity, or of the taxation of legal incomes, may weaken the social norm against crime. Due to the potential multiplicity of equilibria in our model, such a gradual change may even induce a discontinuous increase in the crime rate. We show that law enforcement policies may have dramatic and permanent efects on the crime rate, and lead to hysteresis. We also define political equilibrium under majority rule and show how a majority of individuals, who feel no guilt or shame from violating the law, in political equilibrium can exploit a minority who do have such feelings.
    Keywords: crime; punishment; social norm; political equilibrium
    JEL: D11 D72
    Date: 2005–11–10
  4. By: Michel Benaim; Josef Hofbauer; Ed Hopkins
    Date: 2005–11–21
  5. By: Emrah Arbak (GATE CNRS); Laurence Kranich
    Abstract: We model the interaction between an employer and a worker with interdependent preferences in a simple one-shot production process. In particular, we assume that the worker becomes kinder if she senses that her employer is an altruist. We assume that intentions are private information. Thus, the wage proposal signals the intentions of the employer to the worker. We show that if the workers have ”reasonable” beliefs, then the unique prediction of the game is a separating equilibrium outcome in which wages are fully informative about the intentions of the employer. However, if there are several employers simultaneously bidding to hire a single worker, then there may exist another equilibrium in which wages are completely uninformative.
    Keywords: Altruism, Reciprocity, Asymmetric information, Labor relations, Behavioral game theory
    JEL: C72 D82 J30
    Date: 2005–11

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