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on Evolutionary Economics |
| By: | Ulrich Witt |
| Abstract: | An evolutionary perspective on economic behavior has to account for the influences that the human genetic endowment has on the choices the agents make. Likely to have been fixed in times of fierce selection pressure, this endowment is presumably adapted to the living conditions of early humans. If at all, behavioral economics accounts for its influences on economic decision making in a way similar to the approach taken by evolutionary psychology, i.e. by focusing on decision heuristics and their tensions with modern rationality standards. In an evolutionary perspective, that focus needs to be extended so as to also embrace the motivational underpinnings of economic behavior. In the language of economics this means to inquire into the agents' preferences and to explain how they relate to the human genetic endowment and how they change over time. The paper discusses several implications of such an extension. |
| Keywords: | behavioral economics, evolutionary economics, Darwinism, decision heuristics, preferences, development, growth, welfare Length 21 pages |
| JEL: | A12 B25 B52 D01 D63 O10 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:esi:evopap:2010-17&r=evo |
| By: | Caliendo, Marco (IZA); Fossen, Frank M. (DIW Berlin); Kritikos, Alexander S. (DIW Berlin) |
| Abstract: | Experimental evidence reveals that there is a strong willingness to trust and to act in both positively and negatively reciprocal ways. So far it is rarely analyzed whether these variables of social cognition influence everyday decision making behavior. We focus on entrepreneurs who are permanently facing exchange processes in the interplay with investors, sellers, and buyers, as well as needing to trust others and reciprocate with their network. We base our analysis on the German Socio-Economic Panel and recently introduced questions about trust, positive reciprocity, and negative reciprocity to examine the extent that these variables influence the entrepreneurial decision processes. More specifically, we analyze whether i) the willingness to trust other people influences the probability of starting a business; ii) trust, positive reciprocity, and negative reciprocity influence the exit probability of entrepreneurs; and iii) willingness to trust and to act reciprocally influences the probability of being an entrepreneur versus an employee or a manager. Our findings reveal that, in particular, trust impacts entrepreneurial development. Interestingly, entrepreneurs are more trustful than employees, but much less trustful than managers. |
| Keywords: | entrepreneurship, trust, reciprocity |
| JEL: | D81 J23 M13 L26 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5370&r=evo |
| By: | Benjamin Beranek (Department of Economics, Izmir University of Economics); Alper Duman (Department of Economics, Izmir University of Economics) |
| Abstract: | While the public good experiment has been used to analyze cooperation among various groups in Western Europe and North America, it has not been extensively used in other contexts such as Turkey. This project seeks to rectify that and explore how Turkish university students informally self govern. By employing the public good experiment among a cohort of students attending universities in Ýzmir, Turkey and Adýyaman, Turkey, we hope to quantitatively analyze the factors which lead to altruistic punishment, to antisocial punishment, and ultimately to enhanced cooperation in Turkish society. |
| Keywords: | Cooperation, Free Riding, Altruism, Punishment, Trust, Experimental Economics, Public Good Experiments |
| JEL: | C72 C91 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:izm:wpaper:1004&r=evo |
| By: | van der Weele, Joël (Goethe University Frankfurt); Kulisa, Julija (Goethe University Frankfurt); Kosfeld, Michael (Goethe University Frankfurt); Friebel, Guido (Goethe University Frankfurt) |
| Abstract: | Several studies have shown that dictator-game giving declines substantially if the dictator can exploit situational "excuses" for not being generous. In this experimental study we investigate if this result extends to more natural social interactions involving reciprocal behavior. We provide the second mover in a reciprocal game with an excuse for not reciprocating, an excuse which has previously been shown to strongly reduce giving in dictator games. We do not find that the availability of the excuse has any effect at all on reciprocal behavior, and conclude that reciprocity is a more stable disposition than dictator game generosity. |
| Keywords: | reciprocity, moral wiggle room |
| JEL: | C72 C9 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5374&r=evo |
| By: | Antoci, Angelo; Sabatini, Fabio; Sodini, Mauro |
| Abstract: | This paper proposes an evolutionary framework to explore the dynamics of social interaction in an environment characterized by online networking and increasing pressure on time. The model shows how time pressure encourages the choice to develop social interactions also through online networking instead of relying exclusively on face to face encounters. Our findings suggest that the joint influence exerted by the reduction in leisure time and the new opportunities of participation offered by web-mediated communication may progressively lead a growing share of the population to adopt networking sites as an indispensable environment for the development of interpersonal relationships. |
| Keywords: | internet; computer-mediated communication; social networking; online networks; Facebook; human interaction; social capital |
| JEL: | O33 Z13 D85 C73 |
| Date: | 2010–12–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:27661&r=evo |
| By: | Castellacci, Fulvio |
| Abstract: | This paper presents a survey of theoretical models of heterogeneity, growth and competitiveness. We compare two main theoretical traditions, evolutionary economics and mainstream heterogeneity models, in order to investigate whether the incorporation of heterogeneous agents has made the recent wave of mainstream models more similar to the evolutionary modelling style and results. The results of our survey exercise can be summarized as follows. On the one hand, we observe some increasing similarities and converging aspects between the evolutionary and the mainstream approaches to the study of heterogeneity. On the other hand, however, there are still some fundamental differences between them, which mainly relate to the distinct set of theoretical assumptions and methodological frameworks in which these heterogeneity models are set up and rooted. In short, the evolutionary approach emphasizes the complexities of the growth process and makes an effort to provide a realistic description of it, whereas the mainstream approach does instead follow a modelling methodology that emphasizes the analytical power and tractability of the formalization, even if that implies a somewhat simplified and less realistic description of the growth process. |
| Keywords: | Heterogeneity models; economic growth; international trade; industrial dynamics |
| JEL: | L0 O1 F0 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:27525&r=evo |
| By: | Lee, Frederic; Jo, Tae-Hee |
| Abstract: | Given the emphasis on social provisioning in heterodox economics, two of its central theoretical organizing principles are the concepts of the total social product and the social surplus. This appears to link heterodox economics to the social surplus approach associated with the classical economists and currently with Sraffian economists. However, heterodox economics connects agency with the social surplus and the social product, which the Sraffians reject as they take the level and composition of the social product as given. Therefore the different theoretical approach regarding the social surplus taken in heterodox economics may generate a different but similar way of theorizing about a capitalist economy. To explore this difference is the aim of the paper. Thus the paper is divided into four parts and a conclusion. In the first section social provisioning and the social surplus is introduced. In the second section, the Sraffian social surplus approach is delineated while in the third section the heterodox social surplus approach is delineated. In the fourth section of the paper, some of the implications emerging from the differences between the two approaches are discussed. The paper is concluded in the final section. |
| Keywords: | social surplus; social product; social provisioning; agency; Sraffian economics; heterodox economics |
| JEL: | B51 B50 B5 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:27636&r=evo |
| By: | Anderson, Jon (University of Minnesota, Morris); Burks, Stephen V. (University of Minnesota, Morris); Carpenter, Jeffrey P. (Middlebury College); Goette, Lorenz (University of Lausanne); Maurer, Karsten (Iowa State University); Nosenzo, Daniele (University of Nottingham); Potter, Ruth (University of Minnesota, Morris); Rocha, Kim (University of Minnesota, Morris); Rustichini, Aldo (University of Minnesota) |
| Abstract: | We use a sequential prisoner's dilemma game to measure the other-regarding behavior in samples from three related populations in the upper Midwest of the United States: 100 college students, 94 non-student adults from the community surrounding the college and 1,069 adult trainee truckers in a residential training program. Both of the first two groups were recruited according to procedures commonly used in experimental economics (i.e., via e-mail and bulletin-board advertisements) and therefore subjects self-selected into the experiment. Because the structure of their training program reduced the opportunity cost of participating dramatically, 91% of the solicited trainees participated in the third group, so there was little scope for self-selection in this sample. We find no differences in the elicited other-regarding preferences between the self-selected adults and the adult trainees, suggesting that selection into this type of experiment is unlikely to bias inferences with respect to non-student adult subjects. We also test (and reject) the more specific hypothesis that approval-seeking subjects are the ones most likely to select into experiments. At the same time, we find a large difference between the self-selected students and the self-selected adults from the surrounding community: the students appear considerably less pro-social. Regression results controlling for demographic factors confirm these basic findings. |
| Keywords: | methodology, selection bias, laboratory experiment, field experiment, other-regarding behavior, social preferences, truckload, trucker |
| JEL: | C90 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5389&r=evo |
| By: | Abhijit Kar Gupta |
| Abstract: | An interesting toy model has recently been proposed on Schumpeterian economic dynamics by Thurner {\it et al.} following the idea of economist Joseph Schumpeter. Punctuated equilibrium dynamics is shown to emerge from this model and some detail analyses of the time series indicate SOC kind of behaviours. The focus in the present work is to toss the idea whether the dynamics can really be like a self organized critical (SOC) type. This study indicates that it is necessary to incorporate the concepts of 'fitness' and 'selection' in such a model in the line of the biological evolutionary model by Bak and Sneppen in order to obtain power law and thus SOC behaviour. |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1012.5896&r=evo |
| By: | Blake LeBaron (International Business School, Brandeis University) |
| Abstract: | Evolutionary metaphors have been prominent in both economics and finance. They are often used as basic foundations for rational behavior and efficient markets. Theoretically, a mechanism which selects for rational investors actually requires many caveats, and is far from generic. This paper tests wealth based evolution in a simple, stylized agent-based financial market. The setup borrows extensively from current research in finance that considers optimal behavior with some amount of return predictability. The results confirm that with a homogeneous world of log utility investors wealth will converge onto optimal adaptive forecasting parameters. However, in the case of utility functions which differ from log, wealth selection alone converges to parameters which are economically far from the optimal forecast parameters. This serves as a strong reminder that wealth selection and utility maximization are not the same thing. Therefore, suboptimal financial forecasting strategies may be difficult to drive out of a market, and may even do quite well for some time. |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:brd:wpaper:14&r=evo |
| By: | Kontek, Krzysztof |
| Abstract: | This paper presents the functional relationship between two areas of interest in contemporary behavioral economics: one concerning choices under conditions of risk, the other concerning choices in time. The paper first presents the general formula of the relationship between decision utility, the survival function, and the discounting function, where decision utility is an alternative to Cumulative Prospect Theory in describing choices under risk (Kontek, 2010). The stretched exponential function appears to be a simple functional form of the resulting discounting function. Solutions obtained using more complex forms of decision utility and survival functions are also considered. These likewise lead to the stretched exponential discounting function. The paper shows that the relationship may also have other forms, including the hyperbolic functions typically used to describe the intertemporal experimental results. This solution has however several descriptive disadvantages, which restricts its common use in the description of lottery and intertemporal choices, and in financial asset valuations. |
| Keywords: | Discounted Utility; Hyperbolic Discounting; Decision Utility; Prospect Theory; Asset Valuation |
| JEL: | E43 G12 D81 D90 C91 |
| Date: | 2010–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:27541&r=evo |
| By: | Peters Hans (METEOR) |
| Abstract: | Following prospect theory we consider decision making under risk in which the decision maker''s preferences depend on a reference outcome. An outcome below this reference outcome is regarded as resulting from a loss: a loss decreases the decision maker''s basic utility more than a comparable gain increases this utility. An elegant and simple method to model this phenomenon was proposed by Shalev (2002): the utility of an outcome below the reference outcome is obtained from the basic utility by subtracting a multiple of the loss in basic utility: this multiple, the loss aversion coefficient, is constant across different reference outcomes. We provide a preference foundation for this loss aversion model. |
| Keywords: | econometrics; |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umamet:2010062&r=evo |