nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2007‒02‒17
four papers chosen by
Matthew Baker
US Naval Academy, USA

  1. Organization, evolution, cognition and dynamic capabilities By Nooteboom,Bart
  2. Appraising Schumpeter's 'Essence' after 100 Years: From Walrasian Economics to Evolutionary Economics By Esben Sloth Andersen
  3. Identity, Cooperation, and Punishment By Kendra N. McLeish; Robert J. Oxoby
  4. Evolutionarily Stable Strategies of Random Games, and the Vertices of Random Polygons By Sergiu Hart; Yosef Rinott; Benjamin Weiss

  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: evolutionary economics;organization;cognition;dynamic capabilities
    JEL: D21 L22 O31 B52
    Date: 2007
  2. By: Esben Sloth Andersen
    Abstract: Schumpeter’s unique type of evolutionary analysis can hardly be understood unless we recognise that he developed it in relation to a study of the strength and weaknesses of the Walrasian form of Neoclassical Economics. This development was largely performed in his first book Wesen und Hauptinhalt der theoretischen Nationalökonomie. This German-language book - which in English might be called ‘Essence and Scope of Theoretical Economics’ - was published a century ago (in 1908). Different readings of Wesen provide many clues about the emergence and structure of Schumpeter’s programme for teaching and research. This programme included a modernisation of static economic analysis but he concentrated on the difficult extension of economic analysis to cover economic evolution. Schumpeter thought that this extension required a break with basic neoclassical assumptions, but he tried to avoid controversy by presenting it as only requiring the introduction of innovative entrepreneurs into the set-up of the Walrasian System. Actually, he could easily define the function of his type of entrepreneurs in this manner, but the analysis of the overall process of evolution required a radical reinterpretation of the system of general economic equilibrium. He thus made clear that he could not accept the standard interpretation of the quick Walrasian process of adaptation (tâtonnement). Instead, he saw the innovative transformation of routine behaviour as a relatively slow and conflict-ridden process. This reinterpretation helped him to sketch out his theory of economic business cycles as reflecting the waveform process of economic evolution under capitalism.
    Keywords: Economic statics; evolutionary dynamics; business cycles; Joseph A. Schumpeter; Léon Walras
    JEL: B31 E30 O31
    Date: 2006
  3. By: Kendra N. McLeish (University of Calgary); Robert J. Oxoby (University of Calgary and IZA)
    Abstract: Among economists, there is increased recognition of the role individuals’ identities play in decision-making. In this paper, we conduct laboratory experiments in which we explore the motivations for and the effects of group identity. We find that negative out-group opinion (acting as an inter-group identity threat) can motivate in-group/out-group effects in a simple bargaining context. Further, our results suggest that disparagement of group norms by members of the in-group (acting as an intra-group identity threat) increases the use of costly punishment within the in-group.
    Keywords: identity, fairness, reciprocity, experiments
    JEL: C9 D1 M5
    Date: 2007–01
  4. By: Sergiu Hart; Yosef Rinott; Benjamin Weiss
    Abstract: An evolutionarily stable strategy (ESS) is an equilibrium strategy that is immune to invasions by rare alternative ("mutant") strategies. Unlike Nash equilibria, ESS do not always exist in finite games. In this paper, we address the question of what happens when the size of the game increases: does an ESS exist for "almost every large" game? Letting the entries in the n x n game matrix be randomly chosen according to an underlying distribution F, we study the number of ESS with support of size 2. In particular, we show that, as n goes to infinity, the probability of having such an ESS: (i) converges to 1 for distributions F with "exponential and faster decreasing tails" (e.g., uniform, normal, exponential); and (ii) it converges to 1 - 1/sqrt(e) for distributions F with "slower than exponential decreasing tails" (e.g., lognormal, Pareto, Cauchy). Our results also imply that the expected number of vertices of the convex hull of n random points in the plane converges to infinity for the distributions in (i), and to 4 for the distributions in (ii).
    Date: 2007–01

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