nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2010‒01‒23
nine papers chosen by
Matthew Baker
City University of New York

  1. Heterodox environmental economics: theoretical strands in search of a paradigm By Marletto, Gerardo
  2. Cultural and Institutional Bifurcation: China and Europe Compared By Avner Greif; Guido Tabellini
  3. The behavioral validity of the strategy method in public good experiments By Urs Fischbacher; Simon Gaechter
  4. Free-riding on altruistic punishment? An experimental comparison of third-party-punishment in a stand-alone and in an in-group environment. By Lewisch Peter; Ottone, Stefania; Ponzano, Ferruccio
  5. On the genesis of Hedonic Adaptation By Perez Truglia, Ricardo Nicolas
  6. Reexamination of Individual Knowledge and Common Behavior Rules: A Cross-disciplinary View Based on Empirical Evidences By Liang, Zhao
  7. Design and Evolution in Institutional Development: The Insignificance of the English Bill of Rights By Peter Murrell
  8. Bounding Rationality by Discounting Time By Lance Fortnow; Rahul Santhanam
  9. An Exploration of the Content of Social Norms using Simple Games By López-Pérez, Raúl; Vorsatz, Marc

  1. By: Marletto, Gerardo
    Abstract: Heterodox environmental economics is mainly based on non-mainstream economic theories; more precisely it refers to institutional and Schumpeterian economics. Starting from these theoretical foundations, heterodox environmental economics radically differs from the mainstream approach to environmental economics and policy. Three basic concepts are at the hearth of such a different vision: resource regimes, as institutional structures established to manage natural resources; environmental appraisals, as “value articulating” institutions conditioned by the incommensurability of conflicting values; transitions, as dynamic processes that are needed to unlock existing “socio-technical” systems. But a stable community of researchers defining themselves as ‘evolutionary/institutional environmental economists’ still does not exist. Time will tell if existing connections between some research groups will generate the social core of a nascent paradigm.
    Keywords: Environmental economics; Environmental policy; Institutional economics; Evolutionary theories of economic change
    JEL: Q50 B52
    Date: 2009
  2. By: Avner Greif; Guido Tabellini
    Abstract: How to sustain cooperation is a key challenge for any society. Different social organizations have evolved in the course of history to cope with this challenge by relying on different combinations of external (formal and informal) enforcement institutions and intrinsic motivation. Some societies rely more on informal enforcement and moral obligations within their constituting groups. Others rely more on formal enforcement and general moral obligations towards society at large. How do culture and institutions interact in generating different evolutionary trajectories of societal organizations? Do contemporary attitudes, institutions and behavior reflect distinct pre-modern trajectories?
    Date: 2009
  3. By: Urs Fischbacher (University of Konstanz); Simon Gaechter (University of Nottingham)
    Abstract: We compare the strategy method and the direct response method in public good experiments in a within-subject design. This comparison is interesting because the strategy method is frequently used to investigate preference heterogeneity. We find that people identified by the strategy method as conditional cooperators also behave as conditional cooperators under the direct response method. Free-rider types contribute systematically less than all others but show the most systematic deviation from the predicted contributions, because they contribute in the first half of the direct response experiment. Overall, our results support the behavioral validity of the strategy method in public good experiments.
    Keywords: Public goods experiments, strategy method, direct response method, voluntary cooperation, conditional cooperators, free riders
    JEL: C91 C72 H41 D64
    Date: 2009–12
  4. By: Lewisch Peter; Ottone, Stefania; Ponzano, Ferruccio
    Abstract: This paper deals with the subject of third-party punishment. The paper compares, by means of an economic experiment, punishment by a third party (Stand-Alone case) with punishment by third parties (In-Group environment). This deliberate introduction of a second potential punisher is neither subtle nor marginal. Shifting punishment choices into this "enlarged environment" allows us to study, in a systematic way, the complex relationship between the punisher's expectations about her/his peer's punishment decisions and her/his own punishment choices. In particular, we aim to examine whether, on average, individual punishment is systematically lower in an In-Group environment compared with the Stand-Alone case.
    Keywords: Third-Party Punishment, Collective Punishment
    JEL: C91 C92 K42
    Date: 2010–01
  5. By: Perez Truglia, Ricardo Nicolas
    Abstract: Some sensations, in addition to guide behavior, serve an extra and even more important role: as warning or defense mechanisms (e.g. pain, fever). Additionally, intense sensations are costly from a fitness point of view. With only these two biological facts we show that Nature must design utility functions with regulation mechanisms such as hedonic adaptation or expectation-based preferences. Even though they are rarely incorporated into economic models, such mechanisms are widely recognized and documented in many fields such as neuroscience and psychology. Using such utility functions economists will not only provide more accurate welfare predictions, but we will also increase the number of behavioral phenomena that we are able to explain. Finally, we provide as an application a model of the psychological defenses.
    Keywords: hedonic adaptation; evolution; expectations; decision utility; experienced utility
    JEL: B52 I00
    Date: 2009–07–29
  6. By: Liang, Zhao
    Abstract: Based on evidences from empirical disciplines, the paper offers three different basic assumptions and one simplified framework on individual behavior when dealing with signals from uncertain environments. On the basis of these, the paper defines individual knowledge and shows its hierarchical state, the connatural- and the acquired-shared-knowledge among individuals. Furthermore, the paper describes and explains the sources and general mechanisms of changing of these kinds of knowledge, and stresses that human connatural knowledge is the most stable level in the entire knowledge, which constitutes the fundamental prerequisite for mutually recognizing signals (or events) and interactions among individuals; The acquired-shared-knowledge, however, is the common anticipation owned among individuals about behavioral response of other individuals facing a signal; it derives from interacting experiences between individuals and circumstances or among individuals; and stable accumulation of the knowledge is one of key foundations on which the stable anticipation of individual behavior, commonly behavioral beliefs and rules will can be formed in a group.
    Keywords: individual assumptions; simplified behavior-framework; individual knowledge; knowledge hierarchy; shared knowledge; common behavior rules; empirical evidences
    JEL: B52 A12 D01
    Date: 2009–12–20
  7. By: Peter Murrell (Department of Economics, University of Maryland)
    Abstract: A fundamental question in economic development is how societies first acquire a successful set of institutions. To examine this question, the paper focuses on a paradigmatic example, England in the years surrounding the Glorious Revolution of 1688. North and Weingast (1989) view the constitutional changes following 1688 as an explicit attempt to design a new polity, having the effect of radically altering the functioning of the English political and economic system. The rise of England as a world economic power followed. In contrast, Hayek (1960) views the late 17th century changes as simply summarizing what was already in existence, a product of experience accumulated through trial and error and selective survival of productive institutions, ideas, and habits. This paper argues that the English experience of institutional development cannot be described as creation by design. The rise of England fits Hayek's evolutionary perspective. This conclusion rests on three composite pieces of evidence. First, a search for structural breaks in myriad data sets reveals that socioeconomic change was under way well before 1688. Second, an examination of the historical context and institutional content of each clause of the critical laws shows either that the clauses were already a part of effective law by 1688 or that they did not survive as viable constitutional measures. Third, an analysis of institutional and administrative innovations shows that many key developments affecting government finance were a product of the era before 1688.
    Keywords: Institutions, institutional development, constitutions, Glorious Revolution, design, evolution, Hayek, Bill of Rights
    JEL: O1 N0 O52 K1 N43 N13 H1 P5 B31
    Date: 2009–12
  8. By: Lance Fortnow; Rahul Santhanam
    Abstract: Consider a game where Alice generates an integer and Bob wins if he can factor that integer. Traditional game theory tells us that Bob will always win this game even though in practice Alice will win given our usual assumptions about the hardness of factoring. We define a new notion of bounded rationality, where the payoffs of players are discounted by the computation time they take to produce their actions. We use this notion to give a direct correspondence between the existence of equilibria where Alice has a winning strategy and the hardness of factoring. Namely, under a natural assumption on the discount rates, there is an equilibriumwhere Alice has a winning strategy iff there is a linear-time samplable distribution with respect to which Factoring is hard on average. We also give general results for discounted games over countable action spaces, including showing that any game with bounded and computable payoffs has an equilibrium in our model, even if each player is allowed a countable number of actions. It follows, for example, that the Largest Integer game has an equilibrium in our model though it has no Nash equilibria or E-Nash equilibria.
    Keywords: Bounded rationality; Discounting; Uniform equilibria; Factoring game
    JEL: C72 D58
    Date: 2009–11–16
  9. By: López-Pérez, Raúl (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Vorsatz, Marc (Fundación de Estudios de Economía Aplicada–FEDEA)
    Abstract: The literature on social norms stresses that compliance with norms is approved while deviance is disapproved. Based on this, we explore the content of social norms using experimental data from five dictator games with a feedback stage. Our data suggests that subjects either care about a reciprocity or an efficiency norm.
    Keywords: approval; disapproval; dictator game; experiment; social Norms.
    JEL: A13 C72 D64 Z13
    Date: 2010–01

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