nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2010‒07‒24
two papers chosen by
Matthew Baker
City University of New York

  1. Probability Weighting as Evolutionary Second-best By Florian Herold; Nick Netzer
  2. The Evolution of Secularization: Cultural Transmission, Religion and Fertility Theory, Simulations and Evidence By Ronen Bar-El; Teresa García-Muñoz; Shoshana Neuman; Yossef Tobol

  1. By: Florian Herold (Kellogg School of Management, Northwestern University); Nick Netzer (Socioeconomic Institute, University of Zurich)
    Abstract: The economic concept of the second-best involves the idea that multiple simultaneous deviations from a hypothetical first-best optimum may be optimal once the first-best itself can no longer be achieved, since one distortion may partially compensate for another. Within an evolutionary framework, we translate this concept to behavior under uncertainty. We argue that the two main components of prospect theory, the value function and the probability weighting function, are complements in the second-best sense. Previous work has shown that an adaptive S-shaped value function may be evolutionary optimal if decision-making is subject to cognitive or perceptive constraints. We show that distortions in the way probabilities are perceived can further enhance fitness. The second-best optimum involves overweighting of small and underweighting of large probabilities. Behavior as described by prospect theory might therefore be evolution’s second-best solution to the fitness maximization problem. Our model makes empirically testable predictions about the relation between individuals’ value and probability weighting functions.
    Keywords: Probability Weighting, Prospect Theory, Evolution of Preferences
    JEL: D01 D81
    Date: 2010–07
  2. By: Ronen Bar-El (The Open University); Teresa García-Muñoz (Universidad de Granada); Shoshana Neuman (Department of Economics, Bar Ilan University); Yossef Tobol (Department of Economics, Bar Ilan University)
    Abstract: This study presents an evolutionary process of secularization that integrates a theoretical model, simulations, and an empirical estimation that employs data from 32 countries (included in the International Social Survey Program: Religion II – ISSP, 1998). Following Bisin and Verdier (2000, 2001a), it is assumed that cultural/social norms are transmitted from one generation to the next one via two venues: (i) direct socialization – across generations, by parents; and (ii) oblique socialization – within generations, by the community and cultural environment. This paper focuses on the transmission of religious norms and in particular on the 'religious taste for children'. The theoretical framework describes the setting and the process leading to secularization of the population; the simulations give more insight into the process; and 'secularization regressions' estimate the effects of the various explanatory variables on secularization (that is measured by rare mass-attendance and by rare-prayer), lending support to corollaries derived from the theory and simulations. The main conclusions/findings are that (i) direct religious socialization efforts of one generation have a negative effect on secularization within the next generation; (ii) oblique socialization by the community has a parabolic effect on secularization; and (iii) the two types of socialization are complements in 'producing' religiosity of the next generation.
    Keywords: cultural transmission, religion, fertility, secularization, ISSP
    Date: 2010–06

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