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on Evolutionary Economics |
| By: | Sadowski, Philipp |
| Abstract: | Following Kreps (1979), we consider a decision maker with uncertain beliefs about her own future taste. This uncertainty leaves the decision maker with preference for flexibility: When choosing among menus containing alternatives for future choice, she weakly prefers larger menus. Existing representations accommodating this choice pattern cannot distinguish tastes (indexed by a subjective state space) and beliefs (a probability measure over the subjective states) as different concepts, making it impossible to relate parameters of the representation to choice behavior. We allow choice among menus to depend on exogenous states, interpreted as information. Our axioms yield a representation that uniquely identifies beliefs, provided the impact of information on choice is rich. The result is suggested as a choice theoretic foundation for the assumption, commonly made in the incomplete contracting literature, that contracting parties, who know each other's ranking of contracts, also share beliefs about each others future tastes in the face of unforeseen contingencies. |
| Keywords: | Preference for Flexibility; Uniqueness; Contracts; Subjective Uncertainty |
| JEL: | D86 D84 D81 D82 D83 D80 D01 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:8614&r=evo |
| By: | Natalie Svarcova (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Petr Svarc (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic) |
| Abstract: | Using a simple computational model, we study consequences of herding behavior in population of agents connected in networks with different topologies: random networks, small-world networks and scale-free networks. Agents sequentially choose between two technologies using very simple rules based on the previous choice of their immediate neighbors. We show that different seeding of technologies can lead to very different results in the choice of majority of agents. We mainly focus on the situation where one technology is seeded randomly while the other is directed to targeted (highly connected) agents. We show that even if the initial seeding is positively biased toward the first technology (more agents start with the choice of the first technology) the dynamic of the model can result in the majority choosing the second technology under the targeted hub approach. Even if the change to majority choice is highly improbable targeted seeding can lead to more favorable results. The explanation is that targeting hubs enhances the diffusion of the firm’s own technology and halts or slows-down the adoption of the concurrent one. Comparison of the results for different network topologies also leads to the conclusion that the overall results are affected by the distribution of number of connections (degree) of individual agents, mainly by its variance. |
| Keywords: | technology adoption, simulation, networks, herding behavior |
| JEL: | D71 D74 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2008_07&r=evo |