nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2008‒04‒29
six papers chosen by
Matthew Baker
City University of New York

  1. Workers behavior and labor contract : an evolutionary approach By Victor Hiller
  2. Social Preferences and Public Economics: Mechanism Design when Social Preferences Depend on Incentives By Samuel Bowles; Sung-Ha Hwang
  3. An evolutionary perspective on the economics of energy consumption: the crucial role of habits. By Kevin Marechal
  4. Ashamed to be Selfish By Dillenberger, David; Sadowski, Philipp
  5. Preferences for One-Shot Resolution of Uncertainty and Allais-Type Behavior By Dillenberger, David
  6. Neuroeconomics: A Sober (but Hopeful) Appraisal By B. Douglas Bernheim

  1. By: Victor Hiller (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, Ecole d'économie de Paris - Paris School of Economics - Université Panthéon-Sorbonne - Paris I)
    Abstract: This article investigates the co-evolution of labor relationships and workers preferences. According to recent experimental economics findinggs on social preferences, the workforce is assumed to be heterogeneous. It is composed by both cooperative and non-cooperative workers. In addition, firms differ by the type of contract they offer (explicit or implicit). Finally, both the distribution of preferences and the degree of contractual completeness are endogeneized. Preferences evolve through a process of cultural transmission and the proportion of implicit contracts is driven by an evolutionary process. The complementarity between the transmission of cooperation and the implementation of implicit contracts leads to multiple equilibria which allow for path-dependence. This property is illustrated by the evolutions of American and Japanese labor contracts during the Twentieth century.
    Keywords: Explicit contract, implicit contract, cultural transmission, preferences for reciprocity, path dependence.
    Date: 2008–04
  2. By: Samuel Bowles; Sung-Ha Hwang
    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
    Keywords: Social preferences, implementation theory, incentive contracts, incomplete contracts
    JEL: D52 D64 H21 H41
    Date: 2008–03
  3. By: Kevin Marechal (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels and CEESE, Université Libre de Bruxelles.)
    Abstract: The climate change issue imposes us not only to change the way we produce and convert energy but also to modify current energy consumption patterns. A substantial body of literature has shown that our behaviour is often guided by habits. The existence of habits - not fully conscious forms of behaviour - is important as it contradicts rational choice theory. Their presence thus calls for the setting of new instruments as it is difficult to expect consumers to be capable of exercising control over their consumption of energy in reaction to given incentives. This is further increased in our perspective where the current carbon-based Socio-Technical Systems constraints and shapes consumers’ choices through structural, cultural, social and institutional forces. Habits being potentially “counterintentional”, they can be considered as a form of behavioural lock-in that may explain continued increase of energy consumption. Policies should thus specifically address the performance context of habits.
    Keywords: Habits, Evolutionary Economics, Energy consumption, Lock-in
    JEL: D11 Q40 Q54
    Date: 2008–04
  4. By: Dillenberger, David; Sadowski, Philipp
    Abstract: We study a two-stage choice problem, where alternatives are allocations between the decision maker (DM) and a passive recipient. The recipient observes choice behavior in stage two, while stage one choice is unobserved. Choosing selfishly in stage two, in the face of a fairer available alternative, may inflict shame on DM. DM has preferences over sets of alternatives that represent period two choices. We axiomatize a representation that identifies DM's selfish ranking, her norm of fairness and shame. Altruism is the most prominent motive that can explain non-selfish choice. We identify a condition under which shame to be selfish can mimic altruism, when only stage-two choice is observed by the experimenter. An additional condition implies that the norm of fairness can be characterized as the Nash solution of a bargaining game induced by the second-stage choice problem. The representation is generalized to allow for finitely many recipients and applied to explain a social decision maker's incentive for obfuscation.
    JEL: C78 D63 D81 D64 D78 D80
    Date: 2008–04–16
  5. By: Dillenberger, David
    Abstract: Experimental evidence suggests that individuals are more risk averse when they perceive risk gradually. We address these findings by studying a decision maker (DM) who has recursive preferences over compound lotteries and who cares about the way uncertainty is resolved over time. DM has preferences for one-shot resolution of uncertainty if he always prefers any compound lottery to be resolved in a single stage. We establish an equivalence between dynamic preferences for one-shot resolution of uncertainty and static preferences that are identified with the behavior observed in Allais-type experiments. The implications of this equivalence on preferences over information systems are examined. We define the gradual resolution premium and demonstrate its magnifying effect when combined with the usual risk premium. In an intertemporal context, preferences for one-shot resolution of uncertainty capture narrow framing.
    JEL: D81 D80
    Date: 2008–04–09
  6. By: B. Douglas Bernheim
    Abstract: This paper evaluates the prospects for the emerging field of neuroeconomics to shed light on traditional positive and normative economic questions. It argues that the potential for meaningful contributions, though often misunderstood and frequently overstated, is nevertheless present.
    JEL: D01 D60 D87
    Date: 2008–04

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