nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2009‒10‒03
five papers chosen by
Matthew Baker
City University of New York

  1. Entrepreneurship, Evolution and Geography By Erik Stam
  2. Voronoi languages: Equilibria in cheap-talk games with high-dimensional types and few signals By Gerhard Jäger; Lars Koch-Metzger; Frank Riedel
  3. Evolutionary economic geography and its implications for regional innovation policy By Ron Boschma
  4. Do People Plan? By John Bone; John D Hey; John Suckling
  5. A neurolinguistic approach to performativity in economics By Herrmann-Pillath, Carsten

  1. By: Erik Stam
    Abstract: This chapter is an inquiry into the role of entrepreneurship in evolutionary economic geography. The focus is on how and why entrepreneurship is a distinctly spatially uneven process. We will start with a discussion on the role of entrepreneurship in the theory of economic evolution. Next, we will review the empirical literature on the geography of entrepreneurship. The chapter concludes with a discussion of a future agenda for the study of entrepreneurship within evolutionary economic geography.
    Keywords: entrepreneurship, evolution, geography
    JEL: R0 M13 R11
    Date: 2009–09
  2. By: Gerhard Jäger (Tübingen University); Lars Koch-Metzger (Institute of Mathematical Economics, Bielefeld University); Frank Riedel (Institute of Mathematical Economics, Bielefeld University)
    Abstract: We study a communication game of common interest in which the sender observes one of infinite types and sends one of finite messages which is interpreted by the receiver. In equilibrium there is no full separation but types are clustered into convex categories. We give a full characterization of the strict Nash equilibria of this game by representing these categories by Voronoi languages. As the strategy set is infinite static stability concepts for finite games such as ESS are no longer sufficient for Lyapunov stability in the replicator dynamics. We give examples of unstable strict Nash equilibria and stable inefficient Voronoi Languages. We derive efficient Voronoi languages with a large number of categories and numerically illustrate stability of some Voronoi languages with large message spaces and non-uniformly distributed types.
    Keywords: Cheap Talk, Signaling Game, Communication Game, Dynamic stability, Voronoi tesselation
    JEL: C72 C73 D82 D83
    Date: 2009–08
  3. By: Ron Boschma
    Abstract: Related variety is important to regional growth because it induces knowledge transfer between complementary sectors at the regional level. This is accomplished through three mechanisms: spinoff dynamics, labor mobility and network formation. They transfer knowledge across related sectors, which contributes to industrial renewal and economic branching in regions. Since these mechanisms of knowledge transfer are basically taking place at the regional level, and because they make regions move into new growth paths while building on their existing assets, regional innovation policy should encourage spinoff activity, labor mobility and network formation. Doing so, policy builds on region-specific assets that provides opportunities but also sets limits to what can be achieved by policy. Public intervention should neither apply Ôone-size-fits-allÕ approaches nor adopt Ôpicking-the- winnerÕ strategies, but should aim to connect complementary sectors and exploit related variety as a source of regional diversification.
    Keywords: related variety, evolutionary economic geography, regional innovation systems, regional growth
    JEL: R0 R1 R12
    Date: 2009–09
  4. By: John Bone; John D Hey; John Suckling
    Abstract: We report the results of an experimental investigation of a key axiom of economic theories of dynamic decision making – namely, that agents plan. Inferences from previous investigations have been confounded with issues concerning the preference functionals of the agents. Here, we present an innovative experimental design which is driven purely by dominance- if preferences satisfy dominance, we can infer whether subjects are planning or not. We implement three sets of experiments: the first two (the Individual Treatments) in which the same player takes decisions both in the present and the future; and the third (the Pairs Treatment) in which different players take decisions at different times. The two Individual treatments differed in that, in one, the subjects played sequentially, while, in the other, the subjects had to pre-commit to their future move. In all contexts, according to economic theory, the players in the present should anticipate the decision of the player in the future. We find that over half the participants in all three experimental treatments do not appear to be planning ahead; moreover, their ability to plan ahead does not improve with experience, except possibly when we force subjects to pre-commit to their future decision. These findings identify an important lacuna in economic theories, both for individual behaviour and for behaviour in games.
    Date: 2007–11
  5. By: Herrmann-Pillath, Carsten
    Abstract: In recent sociological studies of markets, especially financial markets, researchers have argued that economics is performative (MacKenzie, Callon et al.). By this they refer to the observation that theories such as the Black-Scholes formula do not simply describe reality, but contributed to the regulatory creation of financial markets in which the agents started to adopt behavioral patterns that correspond to the theory, also relying on artefacts that have been created by the originators of the theory. This notion of performativity fits also other recent uses of language theory in economics, such as the theory of organizational forms in organizational ecology (Carroll and Hannan) or John Searle's theory of institutions. The paper builds on this, especially Searle's approach, and explores the underlying cognitive operations. It is argued that performativity builds on the human capacity to generate new meanings from existing concepts. This is elaborated in the theory of conceptual blending that has been developed by Fauconnier and Turner. For example, blends are a typical phenomenon in the emergence of new business models, such as in the dotcom bubble. The theory of conceptual blending can be based on neuroscientific insights into the operations of the human brain, corresponding to Searle's proposal to ground institutions in neurophysiological dispositions.
    Keywords: Searle's theory of institutions,financial markets,emergence of novelty,conceptual blending,neural theory of metaphor
    JEL: B41 D02 D87
    Date: 2009

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