nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2007‒08‒27
four papers chosen by
Matthew Baker
City University of New York

  1. Behavioral industrial organization, firm strategy, and consumer economics By Azar, Ofer H.
  2. Implementation in adaptive better-response dynamics By Antonio Cabrales; Roberto Serrano
  3. Cooperation among strangers: an experiment with indefinite interaction By Gabriele Camera; Marco Casari
  4. Moral Distance and Moral Motivations in Dictator Games By Fernando Aguiar; Pablo Branas-Garza; Luis M. Miller

  1. By: Azar, Ofer H.
    Abstract: The field of behavioral economics is one of the fastest-growing fields in economics in recent years. Not long ago this was a small field, but over the last decade or so, the field gained more recognition, and today it seems clear that psychological motivations and biases affect economic behavior in many important ways. Insights from psychology were incorporated in several areas of economics. This paper offers a short review of the application of behavioral economics to industrial organization, which can be denoted “behavioral industrial organization,” and on the relationship between behavioral industrial organization, firm strategy, and consumer economics.
    Keywords: industrial organization; behavioral economics; strategy; firm strategy; business strategy; economic psychology; behavioral industrial organization; consumer behavior; consumer economics
    JEL: D40 L10 M20 A12 M30 D10
    Date: 2006
  2. By: Antonio Cabrales (Universidad Carlos III de Madrid); Roberto Serrano (Brown University & IMDEA)
    Abstract: We study the classic implementation problem under the behavioral assumption that agents myopically adjust their actions in the direction of better-responses within a given institution. We offer results both under complete and incomplete information. First, we show that a necessary condition for assymptotically stable implementation is a small variation of (Maskin) monotonicity, which we call quasimonotonicity. Under standard assumptions in economic environments, we also provide a mechanism for Nash implementation which has good dynamic properties if the rule is quasimonotonic. Thus, quasimonotonicity is both necessary and almost sufficient for assymptotically stable implementation. Under incomplete information, incentive compatibility is necessary for any kind of stable implementation in our sense, while Bayesian quasimonotonicity is necessary for assymptotically stable implementation. Both conditions are also essentially sufficient for assymptotically stable implementation. We then tighten the assumptions on preferences and mutation processes and provide mechanisms for stochastically stable implementation under more permissive conditions on social choice rules.
    Keywords: implementation; bounded rationality; evolutionary dynamics; mechanisms
    JEL: C72 D70 D78
    Date: 2007–08–22
  3. By: Gabriele Camera; Marco Casari
    Abstract: We study the emergence of norms of cooperation in experimental economies populated by strangers interacting indefinitely and lacking formal enforcement institutions. In all treatments the efficient outcome is sustainable as an equilibrium. We address the following questions: can these economies achieve full efficiency? Which institutions for monitoring and enforcement promote cooperation? Finally, what classes of strategies are employed to achieve high efficiency? We find that, first, cooperation can be sustained even in anonymous settings; second, some type of monitoring and punishment institutions significantly promote cooperation; and, third, subjects dislike indiscriminate strategies and prefer selective strategies.
    Keywords: experiments, repeated games, cooperation, equilibrium selection, prisoners’ dilemma, random matching
    JEL: C70 C92 D44 D51
    Date: 2007–06
  4. By: Fernando Aguiar (IESA-CSIC); Pablo Branas-Garza (Departamento de Teoria Economica, Universidad de Granada); Luis M. Miller (IESA-CSIC; Strategic Interaction Group, Max Planck Institute of Economics)
    Abstract: We perform an experimenta linvestigation using a dictator game in which individuals must make a moral decision - to give or not to give an amount of money to poor people in the Third World. A questionnaire in which the subjects are asked about the reasons for their decision shows that, at least in this case, moral motivations carry a heavy weight in the decision: the majority of dictators give the money for reasons of a consequentialist nature. Based on the results presented here and of other analogous experiments, we conclude that dicator behavior can be understood in terms of moral distance rather than social distance and that it systematically deviates from the egoism assumption in economic models and game theory.
    Keywords: Keywords: Dictator game, moral distance, moral motivations, experimental economics.
    JEL: A13 C72 C91
    Date: 2007–08–20

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