nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2005‒12‒20
four papers chosen by
Matthew Baker
US Naval Academy, USA

  1. How Do People Learn by Listening to Others? Experimental Evidence from Thailand By Andrew Healy
  2. The Evolutionary Stability of Optimism, Pessimism and Complete Ignorance By Burkhard C. Schipper
  3. Cultural Transmission and Discrimination By Maria Saez-Marti; Yves Zenou;
  4. Time Dependent Bounded Recall Strategies Are Enough to Play the Discounted Repeated Prisoners Dilemma By Barlo, Mehmet; Carmona, Guilherme

  1. By: Andrew Healy (Loyola Marymount University)
    Abstract: This paper presents experimental evidence about how individuals learn from information that comes from inside versus outside their ethnic group. In the experiment, Thai subjects observed information that came from Americans and other Thais that they could use to help them answer a series of questions. Two main findings emerge. First, subjects display overconfidence in their own opinions and place too low a value on the information that they observe. Second, conditional on this overconfidence, subjects weigh American information relative to Thai information in a nearly optimal way. The data also indicates that subjects appear to understand that outside information has extra value because people from different groups know different things and so have an opportunity to learn from each other.
    Keywords: laboratory experiment, economic development, Bayesian updating, behavioral economics, learning
    JEL: C11 C53 C91 D83 O10 Q16
    Date: 2005–12–16
  2. By: Burkhard C. Schipper
    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
  3. By: Maria Saez-Marti (IUI); Yves Zenou (IUI, GAINS and IZA Bonn);
    Abstract: Each worker belongs to either the majority or the minority group and, irrespective of the group she belongs to, can have good or bad work habits. These traits are transmitted from one generation to the next through a learning and imitation process which depends on parents' purposeful investment on the trait and the social environment where children live. In a segregated society, we show that, if a high enough proportion of employers have tastebased prejudices against minority workers, their prejudices are always self-fulfilled in steady state. Affirmative Action improves the welfare of minorities without affecting majority workers whereas integration is beneficial to minority workers but detrimental to workers from the majority group. If Affirmative Action quotas are high enough or integration is strong enough, employers’ negative stereotypes cannot be sustained in steady-state.
    Keywords: ghetto culture, overlapping generations, rational expectations, multiple equilibria, peer effects
    JEL: J15 J71
    Date: 2005–12
  4. By: Barlo, Mehmet; Carmona, Guilherme
    Abstract: We show that for any discount factor, there is a natural number M such that all subgame perfect equilibrium outcomes of the discounted repeated prisoners dilemma can be obtained by subgame perfect equilibrium strategies with the following property: current play depends only on the number of the time-index and on the history of the last M periods. Therefore, players who are restricted to using pure strategies, have to remember, at the most, M periods in order to play any equilibrium outcome of the discounted repeated prisoners dilemma. This result leads us to introduce the notion of time dependent complexity, and to conclude that in the repeated prisoners dilemma, restricting attention to finite time dependent complex strategies is enough.
    Date: 2004

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