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on Evolutionary Economics |
| By: | Michele Berardi |
| Abstract: | In a simple, forward looking univariate model of price determination we investigate the evolution of endogenous predictor choice dynamics in presence of two types of agents: fundamentalists an chartists. We find that heterogeneous equilibria in which fundamentalists and chartists coexist are possible, even when the fraction of agents is endogenized. We then combine evolutionary selection among heterogeneous classes of models with adaptive learning in the form of parameter updating within each class of rules and find that equilibria in which chartists constantly outperform fundamentalists seem never to be learnable. Simulations also show that, in general, interactions between learning and predictor choice dynamics do not prevent convergence of both processes towards their equilibrium values when the equilibrium is E-stable. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:man:cgbcrp:104&r=evo |
| By: | John Duffy; Alexander Matros; Ted Temzelides |
| Abstract: | We explore whether competitive outcomes arise in an experimental implementation of a market game, introduced by Shubik (1972). Market games obtain Pareto inferior (strict) Nash equilibria, in which some, and possibly all, markets are closed. We find that subjects do not coordinate on autarkic Nash equilibria, but favor more efficient `full` Nash equilibria in which all markets are open and there is a large volume of trade. We further find that as the number of agents participating in the market game increases, the full Nash equilibria they achieve come closer to approximating the associated Walrasian equilibrium of the economy. Motivated by these findings, we investigate theoretically whether evolutionary forces lead to Walrasian outcomes in such games. We introduce a strong version of evolutionary stable strategies (SESS) for finite populations. Our concept requires stability against deviations by coalitions of agents. A small coalition of trading agents is sufficient for Pareto improving trade to be generated. In addition, provided that agents lack market power, Nash equilibria corresponding to approximate competitive outcomes constitute the only approximate SESS. |
| JEL: | C72 C73 C92 D51 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:pit:wpaper:366&r=evo |
| By: | Sung Ha Hwang (University of Massachusetts, Amherst); Samuel Bowles (Santa Fe Institute, University of Siena and University of Massachusetts) |
| Abstract: | Some philosophers and social scientists have stressed the importance for good government of an altruistic citizenry that values the well being of one another. Others have emphasized the need for incentives that induce even the self interested to contribute to the public good. Implicitly most have assumed that these two approaches are complementary or at worst additive. But this need not be the case. Behavioral experiments find that if reciprocity-minded subjects feel hostility towards free riders and enjoy inflicting harm on them, near efficient levels of contributions to a public good may be supported when group members have opportunities to punish low contributors. Cooperation may also be supported if individuals are sufficiently altruistic that they internalize the group benefits that their contributions produce. Using a utility function embodying both reciprocity and altruism we show that unconditional altruism towards other members attenuates the punishment motive and thus may reduce the level of punishment inflicted on defectors, resulting in lower rather than higher levels of contributions. Increases in altruism may also reduce the level of benefits from the public project net of contribution costs and punishment costs. The negative effect of altruism on cooperation and material payoffs is greater the stronger is the reciprocity motive among the members. JEL Categories: D64 (altruism); H41 (public goods) |
| Keywords: | public goods, altruism, spite, reciprocity, punishment, cooperation |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2008-13&r=evo |
| By: | Robert Dur (Erasmus University Rotterdam, and CESifo) |
| Abstract: | We develop a model of manager-employee relationships where employees care more for their manager when they are more convinced that their manager cares for them. Managers can signal their altruistic feelings towards their employees in two ways: by offering a generous wage and by giving attention. Contrary to the traditional gift-exchange hypothesis, we show that altruistic managers may offer lower wages and nevertheless build up better social-exchange relationships with their employees than egoistic managers do. In such equilibria, a low wage signals to employees that the manager has something else to offer -- namely, a lot of attention -- which will induce the employee to stay at the firm and work hard. Our predictions are well in line with some recent empirical findings about gift exchange in the field. |
| Keywords: | manager-employee relationships; wages; extra-role behavior; sabotage; gift exchange; social exchange; conditional altruism; reciprocity; signaling game |
| JEL: | D86 J41 M50 M54 M55 |
| Date: | 2008–09–03 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20080082&r=evo |
| By: | Mishra, SK |
| Abstract: | This essay portrays the major currents in recent economic thinking against the orthodoxy and dogmatism of neoclassical economics. It places behavioral economics, experimental economics, evolutionary economics, ecological economics, new institutional economics, agent-based computational economics and post-autistic economics vis-à-vis the classical and the neoclassical economics. It concludes that we may expect a synthesis of all these strands of economic thinking in the near future that will replace neoclassical economics from the citadel of mainstream. Teaching of these strands of new economics has already begun in many universities, although in an un-integrated manner. However, until the neoclassical microeconomics and macroeconomics are replaced by their alternatives and necessary as well as convincing tools of economic analysis are developed, neoclassicism would not give way to modern economics. |
| Keywords: | Behavioral; experimental; evolutionary; ecological; new institutional; agent-based computational; post-autistic; classical; neoclassical; economics; bounded rationality; heterodox; individualism; pluralism |
| JEL: | B20 B29 B25 B15 |
| Date: | 2008–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:10534&r=evo |
| By: | Jeffrey Liebman; Richard Zeckhauser |
| Abstract: | The behavioral revolution in economics has demonstrated that human beings often have difficulty making wise choices. The most widely chronicled difficulties arise for decisions made under conditions of uncertainty, those whose consequences unfold over significant amounts of time, and decisions made in complex environments. Unfortunately, these are precisely the elements involved when individuals choose a health insurance policy, or decide whether to consume health care services. In this paper, we argue that traditional economic models of insurance are woefully insufficient for analyzing the tradeoffs inherent when giving consumers responsibility for making health care choices. We show that behavioral economics provides a stronger normative justification for many features of our existing health care policy than do the models of traditional economics. We then demonstrate that policy analyses of the wide range of subsidies that permeate the health care system change substantially when viewed from the behavioral perspective. In closing, we discuss how recent policy trends can be fruitfully assessed using a behavioral lens. |
| JEL: | D80 H2 I11 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14330&r=evo |
| By: | Martin K. Jones |
| Abstract: | The methodology of experimental economics has developed rapidly over the last ten years with many exciting debates within the field. One of the main contributors to this debate has been Guala who has written several articles and a well- received book on the subject. This paper argues that, while much of what he argues is correct, his views on external validity are not justified and the conclusions which he draws from these views could fatally undermine the experimental economics enterprise. In rejecting the justification of these views, the paper reaffirms the importance of the experiments in economics. |
| Keywords: | Experiments, External Validity, Applicability |
| JEL: | B41 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:dun:dpaper:205&r=evo |
| By: | Ennio Bilancini; Fabio Petri |
| Abstract: | This is a comment on Gintis (2007, 'The Dynamics of General Equilibrium', Economic Journal 117 (523) , 1280–1309), who provides an agent-based model of a Walrasian economy where the tâtonnement is replaced by imitation. His simulations show that the economy converges to the Walrasian equilibrium. Gintis concludes that 1) his stability results provide some justification for the importance placed upon the Walrasian model, and 2) models allowing agents to imitate successful others lead to an economy with a reasonable level of stability and efficiency. Since these conclusions appear to be intended as general, we caution that Gintis's findings can only be accepted for Walrasian models without capital goods; in models with capital goods imitation-based adjustments alter the equilibrium's data (which makes the demonstration of stability impossible) and raise other important problems (absent from Gintis's simulations) still awaiting exploration. |
| Keywords: | Walrasian equilibrium, imitation, stability, agent-based simulations, capital goods |
| JEL: | D51 D58 B12 B13 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:538&r=evo |