nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2009‒06‒17
five papers chosen by
Matthew Baker
City University of New York

  1. Global Analysis of an Expectations Augmented Evolutionary Dynamics By Angelo Antoci; Antonio Gay; Massimiliano Landi; Pier Luigi Sacco
  2. The Spatial Evolution of Innovation Networks: A Proximity Perspective By Ron Boschma; Koen Frenken
  3. Evolution of Coalition Structures under Uncertainty By De Marco, Giuseppe; Romaniello, Maria
  4. "How Does Behavioral Economics Change Policies?" (in Japanese) By Yasushi Iwamoto

  1. By: Angelo Antoci (Department of Economics, University of Sassari); Antonio Gay (University of Florence); Massimiliano Landi (School of Economics, Singapore Management University); Pier Luigi Sacco (IUAV, Venice)
    Abstract: We consider a deterministic evolutionary model where players form expectations about future play. Players are not fully rational and have expectations that change over time in response to current payoffs and feedback from the past. We provide a complete characterization of the qualitative dynamics so induced for a two strategies population game,and relate our findings to standard evolutionary dynamics and equilibrium selection when agents have rational forward looking expectations
    Keywords: evolutionary games; dynamic systems; bounded rationality
    JEL: C73
    Date: 2007–12
  2. By: Ron Boschma; Koen Frenken
    Abstract: We propose an evolutionary perspective on the geography of network formation that is grounded in a dynamic proximity framework. In doing so, we root the proximity concept in an evolutionary approach to the geography of innovation networks. We discuss three topics. The first topic focuses on explaining the structure of networks. The second topic concentrates on explaining the effects of networks on the performance of actors. The third topic deals with the changing role of proximity dimensions in the formation and performance of innovation networks in the longer run.
    Keywords: evolutionary economic geography, knowledge networks, innovation networks, dynamic proximity
    JEL: R0 R1 R12
    Date: 2009–06
  3. By: De Marco, Giuseppe; Romaniello, Maria
    Abstract: In Hart and Kurz (1983), stability and formation of coalition structures has been investigated in a noncooperative framework in which the strategy of each player is the coalition he wishes to join. However, given a strategy profile, the coalition structure formed is not unequivocally determined. In order to solve this problem, they proposed two rules of coalition structure formation: the $\gamma$ and the $\delta$ models. \par In this paper we look at evolutionary games arising from the $\gamma$ model for situations in which each player can choose mixed strategies and has vague expectations about the formation rule of the coalitions in which is not involved; players determine at every instant their strategies and we study how, for every player, subjective beliefs on the set of coalition structures evolve coherently to the strategic choices. Coherency is regarded as a viability constraint for the differential inclusions describing the evolutionary game. Therefore, we investigate viability properties of the constraints and characterize velocities of pairs belief/strategies which guarantee that coherency of beliefs is always satisfied. Finally, among many coherent belief revisions (evolutions), we investigate those characterized by minimal change and provide existence results.
    Keywords: Coalition formation; coherent beliefs; differential inclusions; viability theory; minimal change belief revision
    JEL: D71 C71 D83 C72 C73
    Date: 2008–03–26
  4. By: Yasushi Iwamoto (Faculty of Economics, University of Tokyo)
    Abstract: This paper discusses how behavioral mistakes, focused by behavioral economics, alter normative economics that presumes rational individuals. Behavioral mistakes do not necessarily call for paternalistic policies. Insights of behavioral economics have more significant impact on paternalism than on libertarianism, which has already recognized the limit of individual's rationality and admired liberty. Behavioral economics rather provides the theoretical foundations of the limited ability of government. Researchers have proved, only in few areas, the behavior of others as irrational. Policy is motivated not from the irrational behavior of individuals but from its impacts on the economy. The claim that the irrational behavior leads to undesirable outcome for the society is a joint hypothesis of the individual behavior and its effects on the economy. Traditional analytical tools in economics remain to play an important role in examining the latter hypothesis. The above qualifications do not imply the irrelevance of behavioral economics to policy making. The application of behavioral economics with noticing these qualifications may help to improve policies. The idea of "soft paternalism" elaborated by behavioral economics can refine the conventional idea about paternalism in economics.
    Date: 2009–05
  5. By: Ian McDonald
    Abstract: This paper argues that the theory of wage and price setting in macroeconomics should be broadened to include insights from behavioural economics, in particular prospect theory and loss aversion. The paper shows how broader microeconomic foundations can explain the main features of a realistic Phillips curve, which are the concurrence of a steep SRPC at low unemployment, a flat SRPC at high unemployment and speed-limit effects. The resulting macroeconomic model has the benefits of consistency with important properties of natural rate models, especially a crucial role for inflation expectations and, in determining the economy’s macroeconomic potential, for supply factors, plus the benefit of consistency with the standard IS/LM model. The paper also shows that the behavioural aspects of these broader microeconomic foundations were alluded to by Keynes and Robinson in 1936 when macroeconomics was created.
    JEL: E12 E24 E31
    Date: 2008–08

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