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on Evolutionary Economics |
| By: | Benito Arruñada; Xosé H. Vázquez |
| Abstract: | The paper explores the consequences that relying on different behavioral assumptions in training managers may have on their future performance. We argue that training with an emphasis on the standard assumptions used in economics (rationality and self-interest) leads future managers to rely excessively on rational and explicit safeguarding, crowding out instinctive contractual heuristics and signaling a ‘bad’ type to potential partners. In contrast, human assumptions used in management theories, because of their diverse, implicit and even contradictory nature, do not conflict with the innate set of cooperative tools and may provide a good training ground for such tools. We present tentative confirmatory evidence by examining how the weight given to behavioral assumptions in the core courses of the top 100 business schools influences the average salaries of their MBA graduates. Controlling for the average quality of their students and some other schools’ characteristics, average salaries are significantly greater for those schools whose core MBA courses contain a higher proportion of management courses as opposed to courses based on economics or technical disciplines. |
| Keywords: | Evolutionary psychology, economics, management, contractual heuristics, rationality, self-interest |
| JEL: | A23 B41 D01 D87 M12 M51 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1157&r=evo |
| By: | John Duffy; Felix Munoz-Garcia |
| Abstract: | This paper investigates how the introduction of social preferences affects players` equilibrium behavior in both one-shot and infinitely repeated versions of the Prisoner`s Dilemma game. We first show that defection survives as the unique equilibrium of the stage game if at least one player is not too concerned about inequity aversion. Second, we demonstrate that in the infinitely repeated version of the game, fairness concerns operate as a `substitute` for time discounting, as fairness helps sustain cooperation for lower discount factors. We then extend our results to more general simultaneous-move games, and more general preferences. Finally, we point out the implications of our findings for the design and analysis of experiments involving repeated games. In particular, repeated game equilibria which are thought to be supported by sufficiently large discount factors, may in fact be sustained by a combination of discounting and social preference parameters, an observation that may help rationalize recent experimental findings. |
| JEL: | C72 C73 H43 D91 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:pit:wpaper:383&r=evo |
| By: | Svetlana Pevnitskaya (Department of Economics, Florida State University); Dmitry Ryvkin (Department of Economics, Florida State University) |
| Abstract: | Bargaining fails when participants do not reach an agreement despite an opportunity for Pareto improvement. Numerous experimental studies found that in asymmetric bargaining, where one party proposes the terms and the other can accept or reject the proposal, low offers are typically rejected. We conduct an experiment where upon acceptance the responding party can apply costly rewards and/or punishments, and find that the likelihood of acceptance increases. The least generous offers have the highest chance to be accepted in the presence of punishment alone. Proposers are most generous when responders can both reward and punish, and offer least (even compared to the baseline) when responders can only reward. The optimal scheme of rewards and punishments varies with the population of proposers, indicating that the appropriate scheme can potentially compensate for a mismatch between proposers' and responders' social norms. |
| Keywords: | bargaining, rewards and punishments, experimental economics, ultimatum |
| JEL: | C78 C90 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:fsu:wpaper:wp2009_04_01&r=evo |
| By: | Pamela Lenton (Department of Economics, The University of Sheffield); Paul Mosley (Department of Economics, The University of Sheffield) |
| Abstract: | We argue that trust can be incentivised by measures which increase the ability of trusters to protect themselves against risk. We work within the framework originally established by Berg, Dickhaut and McCabe (1995) in which trust is measured experimentally as the ability to generate reciprocity in response to an initial offer of money within a two-person game. An incentive is conveyed both by means of variations in the multiplier applied to the first player’s initial offer and by giving the first player the opportunity to insure themselves against the possibility that the second player will fail to reciprocate their initial offer. Measured trust is strongly responsive to both these incentives. Thus third parties have the ability to influence the outcome of the game, not only, as in the analysis of Charness et al (2008), by punishing failure to reciprocate and rewarding ‘good’ initial offers, but also by offering protection which strengthens the first player’s risk efficacy, or ratio of assets to risk. |
| Keywords: | Experimental economics; Game theory; Risk; Reciprocity |
| JEL: | A13 C70 C73 D81 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2009004&r=evo |