nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2006‒05‒27
nine papers chosen by
Matthew Baker
US Naval Academy, USA

  1. Organization, evolution, cognition and dynamic capabilities By Nooteboom,Bart
  2. Forms, sources and processes of trust By Nooteboom,Bart
  3. Classification of Human Decision Behavior: Finding Modular Decision Rules with Genetic Algorithms By Franz Rothlauf; Daniel Schunk; Jella Pfeiffer
  4. The Double Nature of Conventions - An Experimental Analysis By Luis M. Miller
  5. Behavioral Economics Comes of Age By Wolfgang Pesendorfer
  6. Personality Preferences in Laboratory Economics Experiments By Kurtis J. Swope; John Cadigan; Pamela M. Schmitt; Robert S. Shupp
  7. Social capital, institutions and trust By Nooteboom,Bart
  8. Human nature in the adaptation of trust By Nooteboom,Bart
  9. Personality Preferences and Pre-Commitment: Behavioral Explanations in Ultimatum Games By Pamela M. Schmitt; Robert S. Shupp; Kurtis J. Swope; Justin Mayer

  1. By: Nooteboom,Bart (Tilburg University, Center for Economic Research)
    Abstract: Using insights from 'embodied cognition' and a resulting 'cognitive theory of the firm', I aim to contribute to the further development of evolutionary theory of organizations, in the specification of organizations as 'interactors' that carry organizational competencies as 'replicators', within industries as 'populations'. Especially, I analyze how, if at all, 'dynamic capabilities' can be fitted into evolutionary theory. I propose that the prime purpose of an organization is to serve as a cognitive 'focusing device'. Here, cognition has a wide meaning, including perception, interpretation, sense making, and value judgements. I analyse how this yields organizations as cohesive wholes, and differences within and between industries. I propose the following sources of variation: replication in communication, novel combinations of existing knowledge, and a path of discovery by which exploitation leads to exploration. These yield a proposal for dynamic capabilities. I discuss in what sense, and to what extent these sources of variation are 'blind' , as postulated in evolutionary theory.
    Keywords: organization;evolution;cognition;dynamic capabilities;learning;invention
    JEL: D21 L22 O31
    Date: 2006
  2. By: Nooteboom,Bart (Tilburg University, Center for Economic Research)
    Abstract: This chapter reviews some key points in the analysis of trust, based on Nooteboom (2002)i. The following questions are addressed. What can we have trust in? What is the relation between trust and control? What are the sources of trust? And what are its limits? By what process is trust built up and broken down? What are the psychological mechanisms involved? The chapter ends with an illustration of trust in the police.
    Keywords: trust;social psychology;mental framing;relational signaling
    JEL: D23 D64 L14 M14 Z13
    Date: 2006
  3. By: Franz Rothlauf; Daniel Schunk; Jella Pfeiffer (Mannheim Research Institute for the Economics of Aging (MEA))
    Abstract: The understanding of human behavior in sequential decision tasks is im- portant for economics and socio-psychological sciences. In search tasks, for example when individuals search for the best price of a product, they are confronted in sequential steps with di®erent situations and they have to decide whether to continue or stop searching. The decision behavior of individuals in such search tasks is described by a search strategy. This paper presents a new approach of ¯nding high-quality search strategies by using genetic algorithms (GAs). Only the structure of the search strategies and the basic building blocks (price thresholds and price patterns) that can be used for the search strategies are pre-speci¯ed. It is the purpose of the GA to construct search strategies that well describe human search behavior. The search strategies found by the GA are able to predict human behavior in search tasks better than traditional search strategies from the literature which are usually based on theoretical as- sumptions about human behavior in search tasks. Furthermore, the found search strategies are reasonable in the sense that they can be well in- terpreted, and generally that means they describe the search behavior of a larger group of individuals and allow some kind of categorization and classi¯cation. The results of this study open a new perspective for future research in developing behavioral strategies. Instead of deriving search strategies from theoretical assumptions about human behavior, researchers can directly analyze human behavior in search tasks and ¯nd appropriate and high- quality search strategies. These can be used for gaining new insights into the motivation behind human search and for developing new theoretical models about human search behavior.
    Date: 2005–06–21
  4. By: Luis M. Miller
    Abstract: This paper aims to integrate both economic and sociological notions of conventions in a single analytical framework. To this end, it starts by distinguishing conceptually between behavioral convention, i.e. an arbitrary but stable social regularity, and normative convention, i.e. a principle of action prescribing how to behave in a certain class of situations. A game theoretical framework to represent the interrelation between both concepts is then introduced. Finally, this relation is studied experimentally. The main results of the experiment are: (1) normative conventions have to be commonly known and accepted among subjects in order to work as guides to coordinate on behavioral conventions; (2) once subjects follow a normative convention they are highly consistent with it in a repeated environment; (3) efficiency concerns are focal in the class of games studied in this paper.
    Keywords: coordination, convention, consistency, efficiency, experiments
    Date: 2006–04
  5. By: Wolfgang Pesendorfer
    Date: 2006–05–14
  6. By: Kurtis J. Swope (Department of Economics, U. S. Naval Academy); John Cadigan (Department of Public Administration, American University); Pamela M. Schmitt (Department of Economics, U. S. Naval Academy); Robert S. Shupp (Department of Economics, Ball State University)
    Abstract: Student volunteers at the U.S. Naval Academy (USNA) participated in one of the following oneshot games: a dictator game, an ultimatum game, a trust game, or a prisoner’s dilemma game. We find limited support for the importance of personality type for explaining subjects’ decisions. With controls for personality preferences, we find little evidence of behavioral differences between males and females. Furthermore, we conclude that seniority breeds feelings of entitlement - seniors at USNA generally exhibited the least cooperative or other-regarding behavior.
    Keywords: Experiments; preferences; personality
    JEL: A12 C72 C78
    Date: 2005–07
  7. By: Nooteboom,Bart (Tilburg University, Center for Economic Research)
    Abstract: This paper analyzes the relations between social capital, institutions and trust. These concepts are full of ambiguity and confusion. This paper attempts to dissolve some of the confusion, by distinguishing trust and control, and analyzing institutional and relational conditions of trust. It presents a tool for the analysis of the foundations of trust and a diagnosis of its strength and viability.
    Keywords: social capital;institutions;trust;economic systems
    JEL: D63 D64 D71 L14 P16 Z13
    Date: 2006
  8. By: Nooteboom,Bart (Tilburg University, Center for Economic Research)
    Abstract: This chapter pleads for more inspiration from human nature, in agent-based modeling. As an illustration of an effort in that direction, it summarizes and discusses an agentbased model of the build-up and adaptation of trust between multiple producers and suppliers. The central question is whether, and under what conditions, trust and loyalty are viable in markets. While the model incorporates some well known behavioural phenomena from the trust literature, more extended modeling of human nature is called for. The chapter explores a line of further research on the basis of notions of mental framing and frame switching on the basis of relational signaling, derived from social psychology.
    Keywords: trust;transaction costs;buyer-supplier relationships;social psychology
    JEL: A14 D64 L14 L24 Z13
    Date: 2006
  9. By: Pamela M. Schmitt (U. S. Naval Academy); Robert S. Shupp (Department of Economics, Ball State University); Kurtis J. Swope (U. S. Naval Academy); Justin Mayer (U. S. Naval Academy)
    Abstract: This paper uses responder pre-commitment and psychological type, as measured by the Myers- Briggs Type Indicator (MBTI), to gain insight into subject behavior in a laboratory ultimatum bargaining experiment. Three experiment design details are noteworthy: (1) one design requires responders to make a nonbinding pre-commitment rejection level prior to seeing the offer, (2) one design requires responders to make a binding pre-commitment rejection level, and (3) one design includes a third person (or “hostage”) who makes no decision, but whose payment depends on the proposal being accepted. Offers are higher when proposers know that responders make a binding pre-commitment to reject but are not different when a hostage is present. Responders make lower pre-commitments when they are binding and when a hostage is present. Behavior in our experiment is generally consistent with hypotheses based on theoretical underpinnings of the MBTI and its descriptions of psychological type.
    Keywords: Ultimatum game; preferences; personality
    JEL: C72 C78 C91
    Date: 2005–05

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