nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2007‒10‒06
three papers chosen by
Matthew Baker
City University of New York

  1. Evolutionary Concept, Genetic Algorithm and Exhibition Contract in Movie Industry By Ch'ng, Kean Siang
  2. Behavioral foundation and agent-based simulation of regional innovation dynamics By Frank Beckenbach; Ramòn Briegel; Maria Daskalakis
  3. Narrow Bracketing and Dominated Choices By Matthew Rabin; Georg Weizsäcker

  1. By: Ch'ng, Kean Siang
    Abstract: The paper is about application of evolutionary concept, particularly the application of natural selection process, to the study of movie industry. The importance of the application is that it allows for the heterogeneity and interdependency of market agents in analyzing the economic choice decision. This complexity always presents an obstacle to the study of market behavior, especially when one has to take into account the constant reinforcing effects among the variables, which often renders the problem elusive. The paper intends to explain the economic process, taking into account this complexity through the use of evolutionary concept.
    Keywords: Evolutionary selection; opportunity costs; learning and sharing rule
    JEL: C63 L21 D71
    Date: 2007–10–03
  2. By: Frank Beckenbach (Department of Economics, University of Kassel); Ramòn Briegel (Department of Economics, University of Kassel); Maria Daskalakis (Department of Economics, University of Kassel)
    Abstract: Starting from the observation that there exists a broad variety for the level as well as for the connectedness of innovation activities in a regional context, we try to figure out a behavioral approach for explaining such a variety. This approach is composed of (i)conceptual and theoretical reflections about the micro-foundation of innovation activities, (ii)an agent-based simulation model for these activities and (iii)empirical regional survey studies as a measuring rod for such an approach. Such a composition can fill the explanatory gap between external conditions for regional innovation activities on one side and the observable innovation outcome by specifying plausible internal conditions for novelty creating activities on the other side. Furthermore the emergence of regional innovation networks can be explained.
    Keywords: Regional Innovation Networks, Multi-Agent-System, Behavioral Economics, Evolutionary Economics
    Date: 2007–08
  3. By: Matthew Rabin (University of California, Berkeley); Georg Weizsäcker (London School of Economics and IZA)
    Abstract: An experiment by Tversky and Kahneman (1981) illustrates that people's tendency to evaluate risky decisions separately can lead them to choose combinations of choices that are first-order stochastically dominated by other available combinations. We investigate the generality of this effect both theoretically and experimentally. We show that for any decisionmaker who does not have constant-absolute-risk-averse preferences and who evaluates her decisions one by one, there exists a simple pair of independent binary decisions where the decisionmaker will make a dominated combination of choices. We also characterize, as a function of a person's preferences, the amount of money that she can lose due to a single mistake of this kind. The theory is accompanied by both a real-stakes laboratory experiment and a large-sample survey from the general U.S. population. Replicating Tversky and Kahneman's original experiment where decisionmakers with prototypical prospect-theory preferences will choose a dominated combination, we find that 28% of the participants do so. In the survey we ask the respondents about several hypothetical large-stakes choices, and find higher proportions of dominated choice combinations. A statistical model that estimates preferences from the survey results is best fit by assuming people have utility functions that are close to prospect-theory value functions and that about 83% of people bracket narrowly. None of these results varies strongly with the personal characteristics of participants. We also demonstrate directly that dominated choices are driven by narrow bracketing: when we eliminate the possibility of narrow bracketing by using a combined presentation of the decisions, the dominated choices are eliminated in the laboratory experiment and are greatly reduced in the survey.
    Keywords: lottery choice, narrow framing, representative-sample experiments
    JEL: B49
    Date: 2007–09

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