nep-evo 2008-11-18 papers

on Evolutionary Economics

Issue of 2008‒11‒18
two papers chosen by
Matthew Baker
City University of New York

Evolution and Correlated Equilibrium By Lars Koch
In what sense do firms evolve? By Bart Nooteboom

By:	Lars Koch
Abstract:	We show that a set of outcomes outside the convex hull of Nash equilibria can be asymptotically stable with respect to convex monotonic evolutionary dynamics. Boundedly rational agents receive signals and condition the choice of strategies on the signals. A set of conditional strategies is asymptotically stable only if it represents a strict (correlated-)equilibrium set. There are correlated equilibria that cannot be represented by an asymptotically stable signal contingent strategy. For generic games it is shown that if signals are endogenous but no player has an incentive to manipulate the signal generating process and if the signal contingent strategy is asymptotically stable, then and only then, the outcome must be a strict Nash equilibrium.
Keywords:	Dynamic Stability, Noncooperative Games, Correlated Equilibrium, Evolution
JEL:	C72 D80
Date:	2008–06
URL:	http://d.repec.org/n?u=RePEc:bon:bonedp:bgse14_2008&r=evo

In what sense do firms evolve?

By:	Bart Nooteboom
Abstract:	Does evolutionary theory help, for a theory of the firm, or, more widely, a theory of organization? In this paper I argue that it does, to some but also limited extent. Evolutionary theories of economies, and of culture, have acquired considerable following, but have also been subject to considerable criticism. Most criticism has been aimed at inappropriate biological analogies, but recently it has been claimed that a 'universal Darwinism', purged of all such mistaken analogy, is both useful and viable. Why should we try to preserve evolutionary theory, and will such theory stand up to sustained critical analysis? How useful is it for theory of the firm? Evolutionary theory appears to be the most adequate theory around for solving the problem of agency and structure, avoiding both an overly rational, managerial 'strategic choice' view of organizations and a 'contingency' view of organizations as fully determined by their environment. Whether universal Darwinism stands up to critical analysis remains to be seen. Here, the focus is on evolutionary theory of organization and of knowledge. Use is made of a constructivist 'embodied cognition' view of cognition and of elements of a cognitive theory of the firm.
Keywords:	Length 33 pages
Date:	2008–11
URL:	http://d.repec.org/n?u=RePEc:esi:evopap:2008-12&r=evo

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