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on Evolutionary Economics |
| By: | Suren Basov; Liam Blanckenberg; Lata Gangadharan |
| Abstract: | The use of bounded rationality in explaining economic phenomena has attracted growing attention. In spite of this, there is still considerable disagreement regarding the meaning of bounded rationality. Basov (2005) argues that when modeling boundedly rational behaviour it is desirable to start with an explicit formulation of the learning process. A complete understanding of the boundedly rational decision-making process requires development of an evolutionary-dynamic model which can give rise to such learning processes. Evolutionary dynamics implies that individuals use heuristics to adjust their choices in light of past experiences, moving in the direction that appears most beneficial, where these adjustment rules are assumed ‘hardwired’ into human cognition through the process of biological evolution. In this paper we elaborate on the latter point by building a model of evolutionary selection relevant to heuristics. We show that in addition to explaining the origin of learning rules this approach also sheds light on some well documented preference anomalies. |
| Keywords: | Bounded Rationality;Heuristics;Replicator Dynamics |
| JEL: | C0 D7 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:mlb:wpaper:1012&r=evo |
| By: | Mozaffar Qizilbash |
| Abstract: | Amartya Sen has advanced a number of distinct arguments against utilitarianism and ‘utility’-based views more generally. One of these invokes various ways in which underdogs can ‘adapt’ and learn to live with their situations. Sen’s argument is related to Jon Elster’s discussion of ‘adaptive preferences’ but is distinct in part because Sen cites the need for underdogs to survive. When read in combination with his discussion of Darwinism, Sen’s discussion of adaptation is relevant to recent work in normative economics which is influenced by evolutionary biology. It poses a problem for Richard Layard’s book on happiness, particularly its policy conclusions. It also poses a problem for Ken Binmore’s account of justice because the empathetic preferences in terms of which interpersonal comparisons are made in Binmore’s account are formed through social evolution. |
| Keywords: | adaptation, preferences, utilitarianism, capability, evolution, happiness Length 21 pages |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:esi:evopap:2007-08&r=evo |
| By: | Leonardo Boncinelli |
| Abstract: | This papers investigates the efficiency of aggregate choice in the long run when the individual decision is driven by both personal experience and imitation. Personal experience is represented by choice sets depending upon previous choices. Imitation is modeled first through popularity weighting and then through a network of social influences. Intuition suggests imitation can work as a source of variety, spreading behaviors among which memory can make selection. However inefficiencies will persist in the stochastically stable distribution whenever the length of memory is not sufficiently long to stop inferior behaviors from moving perpetually along periodic cycles of social influences. |
| Keywords: | imitation; personal experience; limited cognitive capabilities |
| JEL: | D01 D80 D81 D85 Z13 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:519&r=evo |
| By: | Leonardo Boncinelli |
| Abstract: | In this paper I provide a descriptive model of choice over time by a population of constrained maximizing agents. Agents’ choice sets are markovian in the sense that they depend on previous choices. The unperturbed dynamics turns out to be trapped into local maxima whatever the length of memory. In the presence of perturbations efficiency is got with a memory of at least two periods. This provides a useful insight for what drives to efficient evolution in this setting: perturbations create variety and a two period long memory allows comparisons and selection |
| Keywords: | personal experience; limited cognitive capabilities; stochastically stable distribution |
| JEL: | D01 D80 D81 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:516&r=evo |
| By: | Lanteri, Alessandro; Carabelli, Anna |
| Abstract: | Behavioural Economics’ milestones, Endowment Effect and Loss Aversion, have been recognized as ‘well documented,’ ‘robust,’ and ‘important’ even by the critics. But well documented, robust, and important what? Are these stylized facts, theoretical constructs, or psychological truths? Do they express genuine preferences or are they judgement mistakes? We discuss the problems with the nature of these claims in the lights of the goals of Behavioural Economics: to improve economics’ realisticness and to be considered mainstream. We argue that, under sensible interpretations of Loss Aversion and Endowment Effect, Behavioural Economics is neither more realistic than, nor part of the mainstream. |
| Keywords: | Behavioural Economics; Decision-Making; Endowment Effect; Loss Aversion; Uncertainty |
| JEL: | D81 A12 D8 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:5667&r=evo |