nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2007‒03‒03
three papers chosen by
Matthew Baker
US Naval Academy, USA

  1. Evolutionary Thinking in Environmental Economics By Jeroen C.J.M. van den Bergh
  2. Why and How Identity Should Influence Utility By Philipp C. Wichardt
  3. Neoclassical vs evolutionary theories of financial constraints : critique and prospectus. By Alex Coad

  1. By: Jeroen C.J.M. van den Bergh (Vrije Universiteit Amsterdam)
    Abstract: Evolutionary and environmental economics have a potentially close relationship. This paper reviews past and identifies potential applications of evolutionary concepts and methods to environmental economics. This covers a number of themes: resource use and ecosystem management; growth and environmental resources; economic and evolutionary progress; and individual behavior and environmental policy. The treatment will cover both biological and economic – including institutional, organizational and technological – evolutionary phenomena. Attention will be drawn to the fact that evolutionary economics shows a surprising neglect of environmental and natural resource factors.
    Keywords: Coevolution; economic growth; environmental policy; innovation; progress; self-regulation; renewable resources; resilience; social preferences
    JEL: B52 O3 O4 Q2 Q5
    Date: 2007–02–08
  2. By: Philipp C. Wichardt (Economic Theory 3, University of Bonn, Adenauerallee 24-26, D-53113 Bonn, Germany.
    Abstract: This paper provides an argument for the advantage of a preference for identity-consistent behaviour from an evolutionary point of view. Within a stylised model of social interaction, we show that the development of cooperative social norms is greatly facilitated if the agents of the society possess a preference for identity consistent behaviour. As cooperative norms have a positive impact on aggregate outcomes, we conclude that such preferences are evolutionarily advantageous. Furthermore, we discuss how such a preference can be integrated in the modelling of utility in order to account for the distinctive cooperative trait in human behaviour and show how this squares with the evidence.
    Keywords: cognitive dissonance, fairness, identity, reciprocity, social Norms, social preferences, utility
    JEL: A13 C70 C90 D01 Z13
    Date: 2007–01
  3. By: Alex Coad (Centre d'Economie de la Sorbonne)
    Abstract: Complicated neoclassical models predict that if investment is sensitive to current financial performance, this is a sign that something is "wrong" and is to be regarded as a problem for policy. Evolutionary theory, on the other hand, refers to the principle of "growth of the fitter" to explain investment-cash flow sensitives as the workings of a healthy economy. In particular, I attack the neoclassical assumption of managers maximizing shareholder-value. Such an assumption is not a helpful starting point for empirical studies into firm growth. One caricature of neoclassical theory could be "Assume firms are perfectly efficient. Why aren't they getting enough funding ?", whereas evolutionary theory considers that firms are forever struggling to grow. This essay highlights how policy guidelines can be framed by the initial modelling assumptions, even though these latter are often chosen with analytical tractability in mind rather than realism.
    Keywords: Financial constraints, firm growth, evolutionary theory, neoclassical theory, investment.
    JEL: L21 G30
    Date: 2007–02

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