nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2007‒09‒02
five papers chosen by
Matthew Baker
City University of New York

  1. Noise Matters in Heterogeneous Populations By Tom Quilter
  3. The Minority Game: An Economics Perspective By Kets, W.
  4. Decision-Making by Children By Shelly Lundberg; Jennifer Romich; Kwok P. Tsang
  5. Do the right thing: But only if others do so By Bicchieri, Cristina; Erte, Xiao

  1. By: Tom Quilter
    Abstract: The concept of boundedly rational agents in evolutionary game theory has succeeded in producing clear results when traditional methodology was failing. However the majority of such papers have obtained their results when this bounded rationality itself vanishes. This paper considers whether such results are actually a good reflection of a population whose bounded rationality is small, but non-vanishing. We also look at a heterogenous population who play a co-ordination game but have conflicting interests, and investigate the stability of an equilibria where two strategies co-exist together. Firstly, I find that results using the standard vanishing noise approach can be very different from those obtained when noise is small but persistent. Secondly, when the results differ it is the non-vanishing noise approach which selects the co-existence equilibria. As recent economic and psychology studies highlight the irrationality of their human subjects, this paper seeks to further demonstrate that the literature needs to concentrate more on the analysis of truly noisy populations.
    Keywords: Non-vanishing noise, equilibrium selection, strategy co-existence.
  2. By: Friederike Mengel (Universidad de Alicante); Veronika Grimm (Universidad de Alicante)
    Abstract: We experimentally investigate the effect of population viscosity (an increased probability to interact with others of one's type or group) on cooperation in a standard prisoner's dilemma environment. Subjects can repeatedly choose between two groups that differ in the defector gain in the associated prisoner's dilemma. Choosing into the group with the smaller defector-gain can signal one's willingness to cooperate. The degree of viscosity is varied across treatments. We find that viscosity produces an endogenous sorting of cooperators and defectors and persistently high rates ofcooperation. Higher viscosity leads to a sharp increase in overall cooperation rates and in addition positively affects the subjects' intrinsic willingness to cooperate.
    Keywords: Experiments, Cooperation, Group Selection, Norms, Population
    JEL: C70 C73 C90
    Date: 2007–08
  3. By: Kets, W. (Tilburg University, Center for Economic Research)
    Abstract: This paper gives a critical account of the minority game literature. The minority game is a simple congestion game: players need to choose between two options, and those who have selected the option chosen by the minority win. The learning model proposed in this literature seems to differ markedly from the learning models commonly used in economics. We relate the learning model from the minority game literature to standard game-theoretic learning models, and show that in fact it shares many features with these models. However, the predictions of the learning model differ considerably from the predictions of most other learning models. We discuss the main predictions of the learning model proposed in the minority game literature, and compare these to experimental findings on congestion games.
    Keywords: Learning;congestion games;experiments.
    JEL: C73 C90
    Date: 2007
  4. By: Shelly Lundberg (University of Washington, University of Bergen and IZA); Jennifer Romich (University of Washington); Kwok P. Tsang (University of Washington)
    Abstract: In this paper, we examine the determinants of decision-making power by children and young adolescents. Moving beyond previous economic models that treat children as goods consumed by adults rather than agents, we develop a noncooperative model of parental control of child behavior and child resistance. Using child reports of decision-making and psychological and cognitive measures from the NLSY79 Child Supplement, we examine the determinants of shared and sole decision-making in seven domains of child activity. We find that the determinants of sole decision-making by the child and shared decision-making with parents are quite distinct: sharing decisions appears to be a form of parental investment in child development rather than a simple stage in the transfer of authority. In addition, we find that indicators of child capability and preferences affect reports of decision-making authority in ways that suggest child demand for autonomy as well as parental discretion in determining these outcomes.
    Keywords: decision-making, children, family
    JEL: D1 J13
    Date: 2007–07
  5. By: Bicchieri, Cristina; Erte, Xiao
    Abstract: Social norms play an important role in individual decision making. Bicchieri (2006) argues that two different expectations influence our choice to obey a norm: what we expect others to do (empirical expectations) and what we believe others think ought to be done (normative expectations). Little is known about the relative importance of these two types of expectation in individuals’ decisions, an issue that is particularly important when normative and empirical expectations are in conflict (e.g., high crime cities). In this paper, we report data from Dictator game experiments where we exogenously manipulate dictators’ expectations in the direction of either selfishness or fairness. When normative and empirical expectations are in conflict, we find that empirical expectations about other dictators’ choices significantly predict a dictator’s own choice. However, dictators’ expectations regarding what other dictators think should be done do not have a significant impact on their decisions. Our findings about the crucial influence of empirical expectations are important for those who design institutions or policies aimed at discouraging undesirable behavior.
    Keywords: social norms; expectations; dictator game; experimental economis
    JEL: C91 C72
    Date: 2007–08–25

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