|
on Evolutionary Economics |
| By: | Ralph-C Bayer (School of Economics, University of Adelaide); Elke Renner (University of Nottingham); Rupert Sausgruber (University of Copenhagen) |
| Abstract: | We test if confusion and learning could potentially explain all the decay of contributions in the repeated public goods games by implementing a limited information environment to mimic the state of confusion. A comparison shows that the rate of decline is more than twice as high in a standard public goods game. Furthermore, we find that simple learning cannot generate the contribution dynamics, which are commonly attributed to the existence of conditional cooperators. We conclude that cooperative behavior observed in public goods games is not a pure artefact of confusion and learning. |
| Keywords: | public goods experiments, learning, limited information, confusion, conditional cooperation |
| JEL: | C90 D83 H41 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:adl:wpaper:2010-24&r=evo |
| By: | Andersson, O.; Argenton, C.; Weibull, J. (Tilburg University, Center for Economic Research) |
| Abstract: | We model a player’s uncertainty about other players’ strategy choices as smooth probability distributions over their strategy sets. We call a strategy profile (strictly) robust to strategic uncertainty if it is the limit, as uncertainty vanishes, of some sequence (all sequences) of strategy profiles, in each of which every player’s strategy is optimal under under his or her uncertainty about the others. We derive general properties of such robustness, and apply the definition to Bertrand competition games and the Nash demand game, games that admit infinitely many Nash equilibria. We show that our robustness criterion selects a unique Nash equilibrium in the Bertrand games, and that this agrees with recent experimental findings. For the Nash demand game, we show that the less uncertain party obtains the bigger share. |
| Keywords: | Nash equilibrium;refinement;strategic uncertainty;price competition;Bertrand competition;bargaining;Nash demand game |
| JEL: | C72 D43 L13 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:201098&r=evo |
| By: | Bryony Reich (Department of Economics, University of Cambridge) |
| Abstract: | I develop a framework to explain why identity divides some communities and not others. An identity group is defined as a group of individuals with the same `culture'. A community is divided when different identities are socially segregated; a community is integrated when there is no social segregation between different identities. I find three possible outcomes for a community: assimilation, where groups socially integrate and one group conforms to the culture of another; non-assimilative integration, where groups integrate but individuals retain their own identity; and segregation, where groups socially segregate and retain their own culture. I find that certain community environments encourage segregation: (i) communities with similar sized identity groups; (ii) larger communities; (iii) communities with greater cultural distance between identities. Further, when segregation occurs, the cultural divide between the two groups can increase endogenously beyond ex-ante differences. |
| Keywords: | identity, culture, segregation, immigration, immigrants, networks, network formation, coordination, stochastic stability. |
| JEL: | J15 D85 D74 A14 C73 H00 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1010&r=evo |
| By: | Selim Jürgen Ergun (Middle East Technical University - Northern Cyprus Campus. Economics Program and GLOBE); Teresa García-Muñoz (Departamento de Métodos Cuantitativos para la Economía y la Empresa - Universidad de Granada); M.Fernanda Rivas (Middle East Technical University - Northern Cyprus Campus. Economics Program and GLOBE) |
| Abstract: | This paper reviews the experimental economics literature on gender differences concerning four subjects: risk aversion, trust, deception and leadership. The vast majority of the articles we have revised document gender differences in behavior; differences which could be explained by sex-role stereotypes and/or hormonal differences |
| Date: | 2010–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:gra:wpaper:10/14&r=evo |
| By: | Giorgio Coricelli (University of Southern California and Centre of Cognitive Neuroscience, Bron (Lyon), France.); Rosemarie Nagel (Universitat Pomepu Fabra) |
| Abstract: | Bounded rational behaviour is commonly observed in experimental games and in real life situations. Neuroeconomics can help to understand the mental processing underlying bounded rationality and out-of-equilibrium behaviour. Here we report results from recent studies on the neural basis of limited steps of reasoning in a competitive setting – the beauty contest game. We use functional magnetic resonance imaging (fMRI) to study the neural correlates of human mental processes in strategic games. We apply a cognitive hierarchy model to classify subject’s choices in the experimental game according to the degree of strategic reasoning so that we can identify the neural substrates of different levels of strategizing. We found a correlation between levels of strategic reasoning and activity in a neural network related to mentalizing, i.e. the ability to think about other’s thoughts and mental states. Moreover, brain data showed how complex cognitive processes subserve the higher level of reasoning about others. We describe how a cognitive hierarchy model fits both behavioural and brain data. |
| Keywords: | Game theory, Bounded rationality, Neuroeconomics |
| Date: | 2010–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:gra:wpaper:10/11&r=evo |
| By: | Velu, C.; Iyer, S.; Gair, J.R. |
| Abstract: | Players cooperate in experiments more than game theory would predict. We introduce the ‘returns-based beliefs’ approach: the expected returns of a particular strategy in proportion to total expected returns of all strategies. Using a decision analytic solution concept, Luce’s (1959) probabilistic choice model, and ‘hyperpriors’ for ambiguity in players’ cooperability, our approach explains empirical observations in various classes of games including the Prisoner’s and Traveler’s Dilemmas. Testing the closeness of fit of our model on Selten and Chmura (2008) data for completely mixed 2 × 2 games shows that with loss aversion, returns-based beliefs explain the data better than other equilibrium concepts. |
| Keywords: | Rationality, Subjective Probabilities, Returns-Based Beliefs |
| Date: | 2010–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1058&r=evo |
| By: | Ilja Neustadt (Institute for Future Energy Consumer Needs and Behavior (FCN), RWTH Aachen University) |
| Abstract: | Due to the mixed empirical evidence bearing on the economic determinants, beliefs have been at the center of attention of research into preferences for income redistribution. We elicit preferences for income redistribution through a Discrete Choice Experiment performed in 2008 in Switzerland and relate them to several behavioral determinants, in particular to religious beliefs. Estimated marginal willingness to pay (WTP) is positive among those who do not belong to a religious denomination, and negative otherwise. However, the marginal WTP is shown to increase with a higher degree of religiosity. Moreover, those who state that luck or connections play a crucial role in determining economic success exhibit significantly higher WTP values than those who deem e?ort to be decisive. |
| Keywords: | Income redistribution, beliefs, religiosity, welfare state, preferences, willingness to pay, discrete choice experiments |
| JEL: | C35 C93 D63 H29 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:soz:wpaper:1009&r=evo |
| By: | Coralio Ballester (Universidad de Alicante); Penélope Hernández (Universidad de Valencia.) |
| Abstract: | The observation of the actual behavior by economic decision makers in the lab and in the field justifies that bounded rationality has been a generally accepted assumption in many socio-economic models. The goal of this paper is to illustrate the difficulties involved in providing a correct definition of what a rational (or irrational) agent is. In this paper we describe two frameworks that employ different approaches for analyzing bounded rationality. The first is a spatial segregation set-up that encompasses two optimization methodologies: backward induction and forward induction. The main result is that, even under the same state of knowledge, rational and non-rational agents may match their actions. The second framework elaborates on the relationship between irrationality and informational restrictions. We use the beauty contest (Nagel, 1995) as a device to explain this relationship. |
| Date: | 2010–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:gra:wpaper:10/10&r=evo |
| By: | Drichoutis, Andreas; Nayga, Rodolfo; Klonaris, Stathis |
| Abstract: | This article contributes to the research agenda of accommodating psychological insights in conventional lab experiments. We specifically test whether inducing subjects into different mood states has a significant effect on subjects rationality (in the form of preference reversals) and on bidding behavior in homegrown value auctions. We find that mood states can significantly affect the rate of preference reversal and bidding behavior in experimental auction valuation. Specifically we find that subjects exhibit more rational behavior under a positive mood state than under a negative mood state. Subjects in a positive mood provide lower bid values than others. Regardless of mood states, males tend to commit a higher rate of preference reversal than females in mixed gender sessions. However, females tend to commit higher rate of preference reversal in female only sessions than in mixed sessions while males tend to commit a lower rate of preference reversal when in male only sessions than in mixed sessions. |
| Keywords: | mood; affect; rationality; Vickrey auction; preference reversals; gender differences |
| JEL: | C91 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:25597&r=evo |
| By: | Daniel Carvalho; Luis Santos-Pinto |
| Abstract: | This paper applies the cognitive hierarchy model of Camerer, Ho and Chong (2004) to the action commitment game of Hamilton and Slutsky (1990). The model generates the heterogeneity of behavior reported in Huck, Müeller and Normann (2002). The model predicts the spike in the leadership quantity in the first period as well as the spike in the Cournot quantity in the second period. The model predicts delay, a feature that cannot be explained by social preferences. The also model predicts very well the percentage of Stackelberg outcomes, double leadership outcomes, and Stackelberg leaders punished by followers. Notwithstanding, the model produces low first period movement and is unable to generate sufficient percentages of sequential play of Cournot quantities and collusive market outcomes. |
| Keywords: | endogenous timing games; thinking steps; cognitive hierarchy |
| JEL: | C72 D43 L13 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:lau:crdeep:10.06&r=evo |
| By: | Alberto Bisin (New York University, Department of Economics; and NBER); Eleonora Patacchini (Universita’ di Roma "La Sapienza," CEPR, and IZA); Thierry Verdier (Paris School of Economics and CEPR); Yves Zenou (Stockholm University, Research Institute of Industrial Economics, CEPR, and CREAM) |
| Abstract: | We propose a theoretical framework to study the determinants of ethnic and religious identity along two distinct motivational processes which have been proposed in the social sciences: cultural conformity and cultural distinction. Under cultural conformity, ethnic identity is reduced by neighborhood integration, which weakens group loyalties and prejudices. On the contrary, under cultural distinction, ethnic minorities are more motivated in retaining their own distinctive cultural heritage the more integrated are the neighborhoods where they reside and work. Data on ethnic preferences and attitudes provided by the Fourth National Survey of Ethnic Minorities in the UK enables us to test the relative significance of these two identity processes. We find evidence consistent with intense ethnic and religious identity mostly formed as a cultural distinction mechanism. Consistently, we document that ethnic identities are more intense in mixed than in segregated neighborhoods. |
| Keywords: | Ethnicity, identity, intermarriage, cultural transmission. |
| JEL: | A14 J15 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:201025&r=evo |
| By: | Katsunori Yamada; Masayuki Sato |
| Abstract: | This paper provides evidence from Internet-based, large-scale survey data of hypothetical choice experiment on the relative utility hypothesis. The methodology exploited here complements previous empirical results from happiness studies, incentivized choice experiment studies, and neuroscience studies in sucha way that methodological problems among previous studies within these fields are resolved. We show that not only the intensity but also the distribution of relative utility are different across specific comparison benchmarks (internal reference group), and across types of reference groups people are facing in the experiments (external reference group). The relative utility effect among Japanese respondents, while shown to exist in the form of jealousy, is found to be not as strong as can validate the Easterlin paradox. Comparison benchmark with daily contacts is related to stronger jealousy. We also provide empirical evidence, which nuances that the reference group is chosen endogenously. |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:0795&r=evo |