nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2007‒10‒27
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. Language, meaning and games: a model of communication, coordination and evolution By Stefano Demichelis; Jörgen W. Weibull
  3. How much is a friend worth?: directed altruism and enforced reciprocity in social networks By Stephen Leider; Markus M. Möbius; Tanya Rosenblat; Quoc-Anh Do

  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, particularly the evolution of exhibition contract, taking into account this complexity through the use of evolutionary concept.
    Keywords: Evolutionary selection; opportunity costs; learning and sharing rule.
    JEL: D81 B41 L21
    Date: 2007–09–27
  2. By: Stefano Demichelis; Jörgen W. Weibull
    Abstract: Language is arguably a powerful coordination device in real-life interactions. We here develop a game-theoretic model of two-sided pre-play communication that generalizes the cheap-talk approach by way of introducing a meaning correspondence between messages and actions, and postulating two axioms met by natural languages. Deviations from this correspondence are called dishonest and players have a lexicographic preference for honesty, second to material payoffs. The model is first applied to finite and symmetric two-player games and we establish that, in generic and symmetric n x n -coordination games, a Nash equilibrium component in such a lexicographic communication game is evolutionarily stable if and only if it results in the unique Pareto efficient outcome of the underlying game. We discus Aumann’s (1990) example of a Pareto efficient equilibrium that is not self-enforcing. We also extend the approach to one-sided communication.
    Keywords: Communication, coordination, language, honesty, evolutionary stability.
    JEL: C72 C73 D01
    Date: 2007
  3. By: Stephen Leider; Markus M. Möbius; Tanya Rosenblat; Quoc-Anh Do
    Abstract: We conduct field experiments in a large real-world social network to examine why decision-makers treat their friends more generously than strangers. Subjects are asked to divide a surplus between themselves and named partners at varying social distances, but only one of these decisions is implemented. We decompose altruistic preferences into baseline altruism towards strangers, and directed altruism towards friends. In order to separate the motives that are altruistic from the ones that anticipate a future interaction or repayment, we implement an anonymous treatment in which neither player is told at the end of the experiment which decision was selected for payment, and a non-anonymous treatment where both players are told the outcome. Moreover, in order to distinguish between different future interaction channels—including signaling one’s propensity to be generous and enforced reciprocity, where the decision-maker grants the partner a favor because she expects it to be repaid in the future—the experiments include games where transfers both increase and decrease social surplus. We find that decision-makers vary widely in their baseline altruism, but pass at least 50 percent more surplus to friends as opposed to strangers when decision-making is anonymous. Under non-anonymity, transfers to friends increase by an extra 24 percent relative to strangers, but only in games where transfers increase social surplus. This effect increases with the density of the social network structure between both players. Our findings are well explained by enforced reciprocity, but not by signaling or preference-based reciprocity. We also find that partners’ expectations are well attuned to directed altruism, but that they completely ignore the decision-makers’ baseline altruism. Partners with higher baseline altruism have friends with higher baseline altruism and, therefore, are treated better by their friends.
    Keywords: Altruism
    Date: 2007

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