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on Evolutionary Economics |
| By: | Samuel Bowles (Santa Fe Institute, University of Siena, and University of Massachusetts Amherst); Sandra Polanía Reyes (University of Siena) |
| Abstract: | Policies and explicit incentives designed for self-regarding individuals sometimes are less effective or even counterproductive when they diminish altruism, ethical norms and other social preferences. Evidence from 51 experimental studies indicates that this crowding out effect is pervasive, and that crowding in also occurs. A model in which self-regarding and social preferences may be either substitutes or complements is developed and evidence for the mechanisms underlying this non-additivity feature of preferences is provided. The result is a preference-based analogue to the Lucas Critique restricting feasible implementation to allocations that are supportable given the effect of incentives on preferences. JEL Categories: D64, H41, D78, Z13, C90 |
| Keywords: | Public goods, behavioral experiments, social preferences, second best, motivational crowding, explicit incentives |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2009-11&r=evo |
| By: | Ingela Alger (Department of Economics, Carleton University) |
| Abstract: | How can a desire to cooperate in one-shot interactions survive, even though it gives a material disadvantage to its carrier? I analyze this issue using a one-shot public goods game between two altruistic individuals. Within a pair, the least altruistic individual is better off materially. Between pairs, individuals in the pair with the highest degree of altruism are better off materially. I determine the evolutionarily stable degree of altruism, allowing for assortative matching. The stable degree of altruism is strictly smaller than the degree of assortativity, and it may be negative. It is also increasing in the degree of assortativity. For a given degree of assortativity, the stable degree of altruism depends on the relative strength of the within-pair and the between-group e¤ect on material welfare. This relative strength in turn depends on the production and cost functions in the underlying public goods game. |
| Keywords: | public goods, teamwork, altruism, evolution of preferences, evolutionary stability |
| JEL: | D02 D13 |
| Date: | 2009–08–26 |
| URL: | http://d.repec.org/n?u=RePEc:car:carecp:09-06&r=evo |
| By: | Hoff, Karla; Kshetramade, Mayuresh; Fehr, Ernst |
| Abstract: | Well-functioning groups enforce social norms that restrain opportunism, but the social structure of a society may encourage or inhibit norm enforcement. This paper studies how the exogenous assignment to different positions in an extreme social hierarchy - the caste system - affects individuals'willingness to punish violations of a cooperation norm. Although the analysis controls for individual wealth, education, and political participation, low-caste individuals exhibit a much lower willingness to punish norm violations that hurt members of their own caste, suggesting a cultural difference across caste status in the concern for members of one’s own community. The lower willingness to punish may inhibit the low caste’s ability to sustain collective action and so may contribute to its economic vulnerability. |
| Keywords: | Gender and Social Development,Corruption&Anitcorruption Law,Anthropology,Access to Finance,Social Inclusion&Institutions |
| Date: | 2009–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5040&r=evo |
| By: | Horst Hanusch (University of Augsburg, Department of Economics); Andreas Pyka (University of Hohenheim, Department of Economics); Florian Wackermann (University of Augsburg, Department of Economics) |
| Abstract: | Innovation is the major driver of economic growth and development. To analyze innovation processes the restriction of a framework suited to the analysis of innovation towards the industrial sphere of an economy is not sufficient because of the important co-evolutionary dimensions of innovation. Instead, a comprehensive economic theoretical approach is needed which encompasses all spheres of economic life. This paper is filling this gap by introducing Comprehensive Neo-Schumpeterian Economics and the Neo-Schumpeterian approach towards public sector economics. |
| Keywords: | innovation, uncertainty, public sector, co-evolution |
| JEL: | B52 H11 L2 O20 P0 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:aug:augsbe:0306&r=evo |
| By: | Daniel John Zizzo (University of East Anglia, School of Economics, Norwich, UK); Jonathan H.W. Tan (Nottingham University Business School, UK) |
| Abstract: | Game harmony describes how harmonious (non-conflictual) or disharmonious (conflictual) the interests of players are in a game, as embodied in the game? raw payoffs. It departs from the traditional game-theoretic approach in that it is a non equilibrium behavioral approach which can be psychologically founded. We experimentally test the predictive power of basic game harmony measures on a variety of well-known 2×2 games and randomly-generated 2×2 and 3×3 generic games. Our findings support its all rounded predictive power. Game harmony provides an alternative tool that is both powerful and parsimonious, as it does not require information on a subject? degree of rationality, social preferences, beliefs and perceptions are required. |
| Keywords: | games, game harmony, cooperation, behavioral economics. |
| Date: | 2009–07–13 |
| URL: | http://d.repec.org/n?u=RePEc:bbr:workpa:4&r=evo |
| By: | Leonidas, Spiliopoulos |
| Abstract: | This paper addresses the question of whether neural networks (NNs), a realistic cognitive model of human information processing, can learn to backward induce in a two-stage game with a unique subgame-perfect Nash equilibrium. The NNs were found to predict the Nash equilibrium approximately 70% of the time in new games. Similarly to humans, the neural network agents are also found to suffer from subgame and truncation inconsistency, supporting the contention that they are appropriate models of general learning in humans. The agents were found to behave in a bounded rational manner as a result of the endogenous emergence of decision heuristics. In particular a very simple heuristic socialmax, that chooses the cell with the highest social payoff explains their behavior approximately 60% of the time, whereas the ownmax heuristic that simply chooses the cell with the maximum payoff for that agent fares worse explaining behavior roughly 38%, albeit still significantly better than chance. These two heuristics were found to be ecologically valid for the backward induction problem as they predicted the Nash equilibrium in 67% and 50% of the games respectively. Compared to various standard classification algorithms, the NNs were found to be only slightly more accurate than standard discriminant analyses. However, the latter do not model the dynamic learning process and have an ad hoc postulated functional form. In contrast, a NN agent’s behavior evolves with experience and is capable of taking on any functional form according to the universal approximation theorem. |
| Keywords: | Agent based computational economics; Backward induction; Learning models; Behavioral game theory; Simulations; Complex adaptive systems; Artificial intelligence; Neural networks |
| JEL: | C45 C7 C73 |
| Date: | 2009–09–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17267&r=evo |
| By: | William Congdon; Jeffrey R. Kling; Sendhil Mullainathan |
| Abstract: | Behavioral economics is changing our understanding of how economic policy operates, including tax policy. In this paper, we consider some implications of behavioral economics for tax policy, such as how it changes our understanding of the welfare consequences of taxation, the relative desirability of using the tax system as a platform for policy implementation, and the role of taxes as an element of policy design. We do so by reviewing the logic of specific features of tax policy in light of recent findings in areas such as tax salience, program take-up, and fiscal stimulus. |
| JEL: | H2 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15328&r=evo |
| By: | Robin Cubitt (University of Nottingham); Michalis Drouvelis (University of York); Simon Gaechter (University of Nottingham); Ruslan Kabalin (University of Nottingham) |
| Abstract: | In the last thirty years economists and other social scientists investigated people’s normative views on principles of distributive justice. Here we study people’s normative views in social dilemmas, which underlie many situations of economic and social significance. Using insights from moral philosophy and psychology we provide an analysis of the morality of free riding. We use experimental survey methods to investigate people’s moral judgments empirically. We vary others’ contributions, the framing (“give-some” vs. “take-some”) and whether contributions are simultaneous or sequential. We find that moral judgments depend strongly on others’ behaviour; and that failing to give is condemned more strongly than withdrawing all support. |
| Keywords: | moral judgments, framing effects, public goods experiments, free riding |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:cdx:dpaper:2009-15&r=evo |
| By: | Jeffrey Butler; Paola Giuliano; Luigi Guiso |
| Abstract: | A vast literature has investigated the relationship between trust and aggregate economic performance. We investigate the relationship between individual trust and individual economic performance. We find that individual income is hump-shaped in a measure of intensity of trust beliefs available in the European Social Survey. We show that heterogeneity of trust beliefs in the population, coupled with the tendency of individuals to extrapolate beliefs about others from their own level of trustworthiness, could generate the non-monotonic relationship between trust and income. Highly trustworthy individuals think others are like them and tend to form beliefs that are too optimistic, causing them to assume too much social risk, to be cheated more often and ultimately perform less well than those who happen to have a trustworthiness level close to the mean of the population. On the other hand, the low-trustworthiness types form beliefs that are too conservative and thereby avoid being cheated, but give up profitable opportunities too often and, consequently, underperform. Our estimates imply that the cost of either excessive or too little trust is comparable to the income lost by foregoing college. Furthermore, we find that people who trust more are cheated more often by banks as well as when purchasing goods second hand, when relying on the services of a plumber or a mechanic and when buying food. We complement the survey evidence with experimental evidence showing that own trustworthiness and expectations of others' trustworthiness in a trust game are strongly correlated and that performance in the game is hump-shaped. |
| JEL: | A1 A12 D01 O15 Z1 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15344&r=evo |