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on Evolutionary Economics |
| By: | Waltman, L.R.; Eck, N.J.P. van; Dekker, R.; Kaymak, U. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University) |
| Abstract: | We are concerned with evolutionary algorithms that are employed for economic modeling purposes. We focus in particular on evolutionary algorithms that use a binary encoding of strategies. These algorithms, commonly referred to as genetic algorithms, are popular in agent-based computational economics research. In many studies, however, there is no clear reason for the use of a binary encoding of strategies. We therefore examine to what extent the use of such an encoding may influence the results produced by an evolutionary algorithm. It turns out that the use of a binary encoding can have quite significant effects. Since these effects do not have a meaningful economic interpretation, they should be regarded as artifacts. Our findings indicate that in general the use of a binary encoding is undesirable. They also highlight the importance of employing evolutionary algorithms with a sensible economic interpretation. |
| Keywords: | agent-based computational economics;evolutionary algorithm;genetic algorithm;binary encoding;premature convergence |
| Date: | 2009–05–20 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureri:1765016014&r=evo |
| By: | Hillel Bavli |
| Abstract: | Recent studies involving intertemporal choice have prompted many economists to abandon the classical exponential discount utility function in favor of one characterized by hyperbolic discounting. Hyperbolic discounting, however, implies a reversal of preferences over time that is often described as dynamically inconsistent and ultimately irrational. We analyze hyperbolic discounting and its characteristic preference reversal in the context of rule-rationality, an evolutionary approach to rationality that proposes that people do not maximize utility in each of their acts; rather, they adopt rules of behavior that maximize utility in the aggregate, over all decisions to which an adopted rule applies. In this sense, people maximize over rules rather than acts. Rule-rationality provides a framework through which we may examine the rational basis for hyperbolic discounting in fundamental terms, and in terms of its evolutionary foundations. We conclude that although aspects of hyperbolic discounting may contain a certain destructive potential, it is likely that its evolutionary foundations are sound -- and its application may well be as justified and rational today as it was for our foraging ancestors. |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:huj:dispap:dp513&r=evo |
| By: | David K Levine |
| Date: | 2009–06–20 |
| URL: | http://d.repec.org/n?u=RePEc:cla:levarc:814577000000000274&r=evo |
| By: | Chaohong Z.; Van Witteloostuijn A. |
| Abstract: | In this paper, we construct a mathematical model that applies tools from evolutionary game theory to issues in organizational ecology. Evolutionary game theory shares the key feature of mathematical rigor with the industrial organization tradition, but is similar to organizational ecology by emphasizing evolutionary dynamics. Evolutionary game theory may well be a complementary modeling tool for the analytical study of organizational ecology issues, next to formal logic, standard game theory, and agent-based simulation. We illustrate this claim in the context of resource-partitioning theory. We assess the impact of an organization population’s resource space shape and scale economies on organizational performance and market evolution. The model demonstrates that the shift of resource distribution from homogeneous (heterogeneous) to heterogeneous (homogeneous) benefits specialism (generalism). On top of that, we offer a new result by revealing the distinct effects of external and internal scale economies on market evolution. |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:ant:wpaper:2009002&r=evo |
| By: | POPESCU, Ion (Universitatea Spiru Haret, Facultatea de Finante si Banci); Bondrea, Aurelian (Universitatea Spiru Haret, Facultatea de Finante si Banci); Constantinescu, Madalina (Universitatea Spiru Haret, Facultatea de Finante si Banci) |
| Abstract: | Our article offers a survey of behavioral economics and in its actual directions such neuroeconomics, including his historical origins, results, and methods. Our central thesis is that the development of behavioral economics in important respects parallels the development of cognitive science. Neuroeconomics has further bridged the once disparate fields of economics and psychology. Such convergence is almost exclusively attributable to changes within economics. Neuroeconomics has inspired more change within economics than within psychology because the most important findings in Neuroeconomics have posed more of a challenge to the standard economic perspective. The single most important source of inspiration for behavioral economists has been behavioral decision research, which can, in turn, be seen as an integration of ideas from cognitive science and economics. Neuroeconomics has primarily challenged the standard economic assumption that decision making is a unitary process a simple matter of integrated and coherent utility maximization suggesting instead that it is driven by the interaction between automatic and controlled processes. This article reviews neuroeconomic research in areas of interest to both economists and psychologists: decision making under risk and uncertainty, intertemporal choice, and social decision making. |
| Keywords: | neuroeconomics; behavioural economics; affect; behavioral welfare economics; decision making; caeteris paribus |
| JEL: | D84 D87 I38 |
| Date: | 2009–06–16 |
| URL: | http://d.repec.org/n?u=RePEc:ris:sphedp:2009_028&r=evo |
| By: | Randolph Sloof (University of Amsterdam); Joep Sonnemans (University of Amsterdam) |
| Abstract: | We consider repeated trust game experiments to study the interplay between explicit and relational incentives. After having gained experience with two payoff variations of the trust game, subjects in the final part explicitly choose which of these two variants to play. Theory predicts that subjects will choose the payoff dominated game (representing a bad explicit contract), because this game better sustains (implicit) relational incentives backed by either reputational or reciprocity considerations. We also explicitly test how game choice is affected by the length of the repeated game. |
| Keywords: | relational contracts; explicit incentives; crowding out; experiments |
| JEL: | C91 M52 J41 |
| Date: | 2009–04–14 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20090030&r=evo |
| By: | Alistair Munro (National Graduate Institute for Policy Studies, Tokyo, Japan); Danail Popov (Department of Economics, Royal Holloway University of London) |
| Abstract: | Although households are responsible for many important decisions, they have rarely been the subject of economics experiments. We conduct a series of linked and incentivized experiments on decision-making, designed to see if the anomalies typically found in individual choice experiments are found when the subjects are couples from long-term relationships. Specifically we investigate the endowment effect, the compromise effect, asymmetric dominance and the ‘more is less’ phenomena. Comparing the results with two control groups (students and non-student individuals) we find broadly the same pattern of anomalies in individuals as we do in couples. Thus behavioural patterns that appear in individual choices appear relevant for decisions made by established couples. |
| Keywords: | Household choice, Experiment, Family, Anomalies, Endowment Effect, Compromise Effect, Asymmetric Dominance, ‘More is less’. |
| JEL: | C92 D13 D80 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:hol:holodi:0910&r=evo |