nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2006‒06‒17
ten papers chosen by
Matthew Baker
US Naval Academy, USA

  1. Evolutionary Equilibrium in Tullock Contests: Spite and Overdissipation By Burkhard Hehenkamp; Wolfgang Leininger; Alex Possajennikov
  3. Evolutionary Foundations of Aggregate-Taking Behavior By Alex Possajennikov
  4. On Evolutionarily Stable Behavior in Contests By Wolfgang Leininger
  5. Contests over Public Goods: Evolutionary Stability and the Free-Rider Problem By Wolfgang Leininger
  6. Why evolution does not always lead to an optimal proto-language.An approach based on the replicator dynamics By Christina Pawlowitsch
  7. Finite Memory Distributed Systems By Dorofeenko, Victor; Shorish, Jamsheed
  8. Equilibrium selection in the two-population KMR model By Burkhard Hehenkamp
  9. Determinants influencing the choice of a cooperation partner By Uwe Cantner; Andreas Meder
  10. Economic, Neurobiological and Behavioral Perspectives on Building America%u2019s Future Workforce By Eric I. Knudsen; James J. Heckman; Judy L. Cameron; Jack P. Shonkoff

  1. By: Burkhard Hehenkamp; Wolfgang Leininger; Alex Possajennikov
    Abstract: Tullock's analysis of rent-seeking as a contest is reconsidered from an evolutionary point of view. We show that evolutionary stable behavior in a Tullock contest exists and differs from behavior in Nash equilibrium. Evolutionary stable behavior in these contests is robust in a strong sense and may entail overdissipation of the contested rent.
  2. By: Friederike Mengel (Universidad de Alicante)
    Abstract: I present and study an evolutionary model of immigration and culturaltransmission of social norms in a set-up where agents are repeatedly matchedto play a one-shot interaction prisoner´s dilemma. Matching can be non-randomdue to limited integration (or population viscosity). The latter refers to atendency of individuals to have a higher rate of interaction with individuals oftheir type than with similar numbers of other agents. I derive a culturaltransmission mechanism in order to examine the influence of viscosity and ofother institutional characteristics of society on the evolutionary selection of prosocialnorms. The main findings are that strict norms, sustained by stronginternal punishment, need either viscosity or strong institutional pressures topersist, while norms of intermediate strength persist under a variety ofinstitutional characteristics. Endogenizing norm strength allows to identify twoscenarios in which pro-social norms survive: One of rigidity in whichseparation (high viscosity) leads to monomorphic equilibria with strict normsfor cooperation. And one of integration (low viscosity) where intermediatenorms persist in polymorphic equilibria. Furthermore, with endogenous norms,viscosity and cooperation are not linked in a monotone way.
    Keywords: Cultural Evolution, Game Theory, Social Norms, Cooperation, Population Viscosity.
    JEL: C70 C73 Z13
    Date: 2006–06
  3. By: Alex Possajennikov
    Abstract: I show that aggregate-taking behavior is often evolutionarily stable for finite populations in symmetric games in which payoff depends only on own strategy and an aggregate. I provide economic examples exhibiting this phenomenon.
  4. By: Wolfgang Leininger
    Abstract: It is argued in this paper that the solution concept of an evolutionary stable strategy (ESS) is an adequate analysis tool for contest theory. Moreover, it is shown that in a contest ESS always differs from Nash equilibrium, the hitherto dominant solution concept in contest theory. Finally, an interpretation of finite population ESS contest behavior in terms of Nash behavior is supplied.
  5. By: Wolfgang Leininger
    Abstract: We analyze group contests for public goods by applying the solution concept of an evolutionary stable strategy (ESS). We show that a global ESS cannot exist, because a mutant free-rider can always invade group behavior succesfully. There does exist, however, a unique local ESS, which we identify with evolutionary equilibrium. It coincides with Nash equilibrium, the hitherto dominant solution concept in contest theory, if and only if groups are symmetric. For asymmetric groups it always proposes a different and arguably more sensible solution than Nash equilibrium. We explore the properties of (local) ESS in detail.
  6. By: Christina Pawlowitsch
    Abstract: Sender–receiver models in the style of Lewis (1969), Hurford (1989), or Nowak and Krakauer (1999) can be used to explain meaning of signals in situations of cooperative interaction. Importantly, meaning here is not an ex–ante concept, but arises as an equilibrium property of a game. A strategy of this game is a pair of a sender and a receiver matrix, where the sender matrix links events that possibly become the object of communication to signals, and the receiver matrix links potentially received signals to events. A Nash equilibrium strategy of this game can be interpreted as a so–called proto–language, that is, a set of event–signals relations that facilitate communication over a finite number of events. A typical property of this game is that it admits a multiplicity of Nash equilibrium components, where two (or more) events share the use of one signal or where two (or more) signals are associated with the same event, leading to a situation where some of the potential of communication if left unexploited. W¨arneryd (1993) as well as Trapa and Nowak (2000) show that only the strict Nash strategies, where each event is bijectively linked to one signal and where the inverse of this mapping is used to associate signals with events, which therefore guarantee the full potential of communication, are evolutionarily stable. Evolutionary stability implies asymptotic stability in the replicator dynamics. Interestingly, simulations with this model in the style of a replicator dynamics as reported in Nowak and Krakauer (1999) typically give rise to a suboptimal proto–language, where more than one event is linked to the same signal whereas another signal remains idle. In view of W¨arneryd (1993) and Trapa and Nowak (2000) this raises the following questions: Does this reflect generic behavior of the replicator dynamics for this model? And, if so, what are the properties of a strategy that can protect itself from being driven out by this dynamics despite the fact that it cannot be evolutionarily stable? This paper gives answers to these questions in terms of neutral stability and its dynamic consequences. It, first, provides a complete characterization of neutrally stable strategies for this game, showing that in such a situation, indeed, there can be two (or more) events that are linked to the same signal or two (or more) signals that are linked to the same event, as long as the degree of ambiguity is not too high. Second, it analyzes the long–run behavior of the replicator dynamics of this model. This essentially derives from neutral stability together with the symmetry properties of this game. Building on a result by Bomze (2002), which establishes equivalence of neutral stability and Lyapunov stability in the replicator dynamics for doubly symmetric games with pairwise interaction, it can be shown that the replicator dynamics of this model does not necessarily lead to an optimal proto–language, but that it can be trapped in situations of ambiguous event–signal relations, where some of the potential of communication is left unexploited.
    JEL: C
    Date: 2006–06
  7. By: Dorofeenko, Victor (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria); Shorish, Jamsheed (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria)
    Abstract: A distributed system model is studied, where individual agents play repeatedly against each other and change their strategies based upon previous play. It is shown how to model this environment in terms of continuous population densities of agent types. A complication arises because the population densities of different strategies depend upon each other not only through game payoffs, but also through the strategy distributions themselves. In spite of this, it is shown that when an agent imitates the strategy of his previous opponent at a sufficiently high rate, the system of equations which governs the dynamical evolution of agent populations can be reduced to one equation for the total population. In a sense, the dynamics 'collapse' to the dynamics of the entire system taken as a whole, which describes the behavior of all types of agents. We explore the implications of this model, and present both analytical and simulation results.
    Keywords: Fixed strategy, Prisoner's dilemma, Fokker-Plank, Distributed system
    JEL: C61 C73
    Date: 2006–05
  8. By: Burkhard Hehenkamp
    Abstract: This paper shows that, contrary to common conception, robust equilibrium selection is possible in the two-population model of evolution by Kandori, Mailath and Rob (1993). Investigating the class of individualistic adjustment dynamics, we establish that, for generic 2x2 co-ordination games, the evolutionary process always selects the mutation-dominant equilibrium. The concepts of mutation dominance and risk dominance yield different equilibrium predictions, since the concept of mutation dominance additionally captures the systemic risk arising from random matching.
  9. By: Uwe Cantner (University of Jena, Faculty of Economics); Andreas Meder (University of Jena, Faculty of Economics)
    Abstract: This paper provides empirical tests of hypotheses of cooperative behavior provided by evolutionary approaches in the resource-based view of the firm. The influences of "technological proximity", individual incentives to cooperate and managerial tools to the choice of research partner are analyzed. Using German patent data we can show the positive influence of those three determinants. The results of this paper confirm theories dealing with the path-dependency of research activities.
    Keywords: innovation, resource-based view of the firm, cooperation, technological proximity, organizational know-how
    JEL: C30 L14 O32
    Date: 2006–06–10
  10. By: Eric I. Knudsen; James J. Heckman; Judy L. Cameron; Jack P. Shonkoff
    Abstract: A growing proportion of the U.S. workforce will have been raised in disadvantaged environments that are associated with relatively high proportions of individuals with diminished cognitive and social skills. A cross-disciplinary examination of research in economics, developmental psychology, and neurobiology reveals a striking convergence on a set of common principles that account for the potent effects of early environment on the capacity for human skill development. Central to these principles are the findings that early experiences have a uniquely powerful influence on the development of cognitive and social skills, as well as on brain architecture and neurochemistry; that both skill development and brain maturation are hierarchical processes in which higher level functions depend on, and build on, lower level functions; and that the capacity for change in the foundations of human skill development and neural circuitry is highest earlier in life and decreases over time. These findings lead to the conclusion that the most efficient strategy for strengthening the future workforce, both economically and neurobiologically, and for improving its quality of life is to invest in the environments of disadvantaged children during the early childhood years.
    JEL: J24
    Date: 2006–06

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