nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2006‒02‒26
six papers chosen by
Matthew Baker
US Naval Academy, USA

  1. The Dynamics of Trust and Trustworthiness on EBay. An Evolutionary Analysis of Buyer Insurance and Seller Reputation By Friederike Mengel; Axel Ockenfels; Werner Güth
  2. Altruism and Gender in the Trust Game By Alessandro Innocenti; Maria Grazia pazienza
  3. Perception and pursuit of entrepreneurial opportunities: an evolutionary economics perspective By G. Buenstorf
  4. Evolutionary stability and Nash equilibrium in finite populations, with an application to price competition By Ana B. Ania
  5. Strategic Marketing Alliances, Partnerships and Networks – The Logic of Cooperation, Roots, Evolution and Advantage By Oburai Prathap; Baker Michael J
  6. Sorting in Experiments with Application to Social Preferences By Edward Lazear; Ulrike Malmendier; Roberto Weber

  1. By: Friederike Mengel; Axel Ockenfels; Werner Güth
    Abstract: Applying an evolutionary framework, we investigate how a reputation mechanism and a buyer insurance (as used on Internet market platforms such as eBay) interact to promote trustworthiness and trust. Our analysis suggests that the costs involved in giving reliable feedback determine the gains from trade that can be obtained in equilibrium. Buyer insurance, on the other hand, can affect the trading dynamics and equilibrium selection. We find that, under reasonable conditions, buyer insurance crowds out trust and trustworthiness.
    Date: 2006–01
  2. By: Alessandro Innocenti; Maria Grazia pazienza
    Abstract: This paper analyses gender differences in the trust game. Our experiment implements the triadic design proposed by Cox (2004) to discriminate between transfers resulting from trust or trustworthiness and transfers resulting from altruistic preferences. We observe that women exhibit a higher degree of altruism than men for both trust and trustworthiness but relatively more for trustworthiness. This result provides an explanation to the experimental finding that women reciprocate more than men.
    Keywords: gender differences; trust; trustworthiness; altruism; gender pairing
    JEL: C90 C91 D64 J16
    Date: 2006–02
  3. By: G. Buenstorf
    Abstract: Considerable debate surrounds the concept of entrepreneurial opportunities. This paper contributes to the discussion by bringing in concepts and findings from evolutionary economics. It makes three points. First, adopting an evolutionary market process perspective sheds new light on the nature of opportunities. Second, not only the pursuit of entrepreneurial opportunities, but also the further development of the entrepreneurial venture is dependent on subjective opportunity perception and interpretation. Third, findings on industry evolution help understand how opportunities, as well as agents’ ability and willingness to pursue them, change over time. Effects of pre-entry experience on opportunity recognition and firm performance are also discussed.
    Keywords: opportunities, market process, business conceptions, industry evolution, spin-offs
    JEL: B25 D21 M13 L10
    Date: 2006–01
  4. By: Ana B. Ania
    Abstract: Schaffer (1988) proposed a concept of evolutionary stability for finite-population models that has interesting implications in economic models of evolutionary learning, since it is related to perfectly competitive equilibrium. The present paper explores the relation of this concept to Nash equilibrium in particular classes of games, including constant-sum games, games with weak payoff externalities, and games where imitative decision rules are individually improving. An illustration of the latter is provided in the context of Bertrand oligopoly with homogeneous product which allows for a characterization of the set of evolutionarily stable prices.
    JEL: B52 C72 D43 D83 L13
    Date: 2005–11
  5. By: Oburai Prathap; Baker Michael J
    Abstract: The marketing discipline is evolving and so is its agenda with the advent of relationship marketing, networks and other related sub-fields. Till recently, business literature focused largely on competition, and cooperation, its counter part, has received insufficient attention. With a view to redress the situation, this research article investigates the phenomenon of strategic marketing alliances, partnerships and networks, and aims to make fundamental theoretical contributions in the sub-field of business-to-business relations and cooperation. Eclectic and wide-ranging enquiry is a main research tool employed and hence the character of this research is interdisciplinary. An extensive literature review of a number of related disciplines is undertaken in order to capture the essence of cooperative strategies and implications for competitive advantage. In this paper, we examine the phenomenon of cooperation and its evolution over time, and highlight the advantages of cooperative strategies in the workplace and in economic organisation. Following an introductory section, we discuss in the second and third sections the evolution of cooperation and need for adaptation on the part entities in order to obtain favourable outcomes. Fourth section continues the discussion along the biological evolutionary lines and adds the crucial dimension of social organisation. Consequent changes that altered the ways in which societies and economies developed are captured in the fifth section. The final and concluding section is devoted to exploring avenues for building of theories that explain cooperative forms of organisation.
    Keywords: Business-Business Marketing, Marketing Strategy, Relationship Marketing
    Date: 2006–02–17
  6. By: Edward Lazear; Ulrike Malmendier; Roberto Weber
    Abstract: Experiments provide a controlled setting where factors can be isolated and studied more easily than in the field, but they often do not allow participants to sort into or out of environments based on their preferences, beliefs, and skills. We conduct an experiment to demonstrate the importance of sorting in the context of social preferences. When individuals are constrained to play a dictator game, 74% of the subjects share. But when subjects are allowed to avoid the situation altogether, less than one third share. This reversal of proportions illustrates that the influence of sorting limits the generalizability of experimental findings that do not allow sorting. Moreover, institutions designed to entice pro-social behavior may induce adverse selection. We find that increased payoffs prevent foremost those subjects from opting out who share the least initially. Thus the impact of social preferences remains much lower than in a mandatory dictator game, even if sharing is subsidized by higher payoffs. Our experiment also sheds light on the motives for sharing. While much sharing is consistent with other-regarding preferences, the majority of subjects share without really wanting to, as evidenced by their willingness to avoid the dictator game and to even pay for avoiding it.
    JEL: B41 C90 D64
    Date: 2006–02

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