nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2008‒04‒04
six papers chosen by
Matthew Baker
City University of New York

  1. Imitation and the Evolution of Walrasian Behavior: Theoretically Fragile but Behaviorally Robust By Apesteguia, Jose; Huck, Steffen; Oechssler, Jörg; Weidenholzer, Simon
  2. Social Preferences and Public Economics: Mechanism design when social preferences depend on incentives By Samuel Bowles; Sung Ha Hwang
  3. Social Decision Theory: Choosing within and between Groups By Fabio Maccheroni; Massimo Marinacci; Aldo Rustichini
  5. Myopically Forward-Looking Agents in a Network Formation Game: Theory and Experimental Evidence By Berninghaus, Siegfried K.; Ehrhart, Karl-Martin; Ott, Marion
  6. Ambiguity and Social Interaction By Eichberger, Jürgen; Kelsey, David; Schipper, Burkhard

  1. By: Apesteguia, Jose (Department of Economics and Business, Universitat Pompeu Fabra); Huck, Steffen (Department of Economics, University College London); Oechssler, Jörg (Department of Economics, University of Heidelberg); Weidenholzer, Simon (Department of Economics, University of Vienna)
    Abstract: A well-known result by Vega-Redondo implies that in symmetric Cournot oligopoly, imitation leads to the Walrasian outcome where price equals marginal cost. In this paper we show that this result is not robust to the slightest asymmetry in fixed costs. Instead of obtaining the Walrasian outcome as unique prediction, every outcome where agents choose identical actions will be played some fraction of the time in the long run. We then conduct experiments to check this fragility. We obtain that, contrary to the theoretical prediction, the Walrasian outcome is still a good predictor of behavior.
    Date: 2007–12–05
  2. By: Samuel Bowles (Santa Fe Institute, University of Siena and University of Massachusetts); Sung Ha Hwang (University of Massachusetts, Amherst)
    Abstract: Social preferences such as altruism, reciprocity, intrinsic motivation and a desire to uphold ethical norms are essential to good government, often facilitating socially desirable allocations that would be unattainable by incentives that appeal solely to self-interest. But experimental and other evidence indicates that conventional economic incentives and social preferences may be either complements or substitutes, explicit incentives crowding in or crowding out social preferences. We investigate the design of optimal incentives to contribute to a public good under these conditions. We identify cases in which a sophisticated planner cognizant of these non-additive effects would make either more or less use of explicit incentives, by comparison to a naive planner who assumes they are absent. JEL Categories: D52, D64, H21. H41
    Keywords: Social preferences, implementation theory, incentive contracts, incomplete contracts, framing, motivational crowding out, ethical norms, constitutions
    Date: 2008–03
  3. By: Fabio Maccheroni; Massimo Marinacci; Aldo Rustichini
    Abstract: We introduce a theoretical framework in which to study interdependent preferences, where the outcome of others affects the preferences of the decision maker. The dependence may take place in two conceptually different ways, depending on how the decision maker evaluates what the others have. In the first he values his outcome and that of others on the basis of his own utility. In the second, he ranks outcomes according to a social value function. These two different views of the interdependence have separate axiomatic foundations. We then characterize preferences according to the relative importance assigned to social gains and losses, or in other words to pride and envy. Finally, we study a two period economy in which agents have our social preferences. We show how envy leads to conformism in consumption behavior and pride to diversity.
    Keywords: Social preferences, social economics.
    JEL: D81 E21
    Date: 2008
  4. By: Béal, Sylvain (Sonderforschungsbereich 504)
    Abstract: We study the finitely repeated prisoner’s dilemma in which the players are restricted to choosing strategies which are implementable by a machine with a bound on its complexity. One player must use a finite automaton while the other player must use a finite perceptron. Some examples illustrate that the sets of strategies which are induced by these two types of machines are different and not ordered by set inclusion. The main result establishes that a cooperation in almost all stages of the game is an equilibrium outcome if the complexity of the machines players may use is limited enough. This result persists when there are more than T states in the player’s automaton, where T is the duration of the repeated game. We further consider the finitely repeated prisoner’s dilemma in which the two players are restricted to choosing strategies which are implementable by perceptrons and prove that players can cooperate in most of the stages provided that the complexity of their perceptrons is sufficiently reduced.
    Date: 2007–08–06
  5. By: Berninghaus, Siegfried K. (Universität Karlsruhe); Ehrhart, Karl-Martin (Universitaet Karlsruhe); Ott, Marion (Universitaet Karlsruhe)
    Abstract: A population of players is considered in which each agent can select her neighbors in order to play a 2x2 Hawk-Dove game with each of them. We design our experiment in continuous time where participants may change their Hawk-Dove action and/or their neighborhood at any point in time. We are interested in the resulting formation of networks and the action distributions. Compared with static Nash equilibrium (e.g., Berninghaus and Vogt, 2004, 2006; Bramoulle, Lopez-Pintado, Goyal, and Vega-Redondo, 2004) and social optimum as theoretical benchmark solutions, subjects seem to employ a more complex, forward-looking thinking. We develop an other benchmark solution, called one-step-ahead stability, that combines forward-looking belief formation with rational response and that fits the data much better.
    Date: 2008–01–31
  6. By: Eichberger, Jürgen (Sonderforschungsbereich 504); Kelsey, David (Department of Economics, The University of Birmingham); Schipper, Burkhard (University of California, Davis Department of Economics)
    Abstract: We present a non-technical account of ambiguity in strategic games and show how it may be applied to economics and social sciences. Optimistic and pessimistic responses to ambiguity are formally modelled. We show that pessimism has the effect of increasing (decreasing)equilibrium prices under Cournot (Bertrand) competition. In addition the effects of ambiguity on peace-making are examined. It is shown that ambiguity may select equilibria in coordination games with multiple equilibria. Some comparative statics results are derived for the impact of ambiguity in games with strategic complements.
    Date: 2007–06–20

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