nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2011‒01‒16
four papers chosen by
Matthew Baker
City University of New York

  1. The emerging empirics of evolutionary economic geography By Ron Boschma; Koen Frenken
  2. Subject-specific Performance Information can worsen the Tragedy of the Commons: Experimental Evidence By Villena, Mauricio G.; Zecchetto, Franco
  3. Learning (Not) To Yield: An Experimental Study of Evolving Ultimatum Game Behavior By Judith Avrahami; Werner Güth; Ralph Hertwig; Yaakov Kareev; Hironori Otsubo
  4. Patience, cognitive skill and coordination in the repeated stag hunt By Al-Ubaydli, Omar; Jones, Garett; Weel, Jaap

  1. By: Ron Boschma; Koen Frenken
    Abstract: Following last decadeÕs programmatic papers on Evolutionary Economic Geography, we report on recent empirical advances and how this empirical work can be positioned vis-ˆ-vis other strands of research in economic geography. First, we review studies on the path dependent nature of clustering, and how the evolutionary perspective relates to that of New Economic Geography. Second, we discuss research on agglomeration externalities in Regional Science, and how Evolutionary Economic Geography contributed to this literature with the concepts of cognitive proximity and related variety. Third, we go into the role of institutions in Evolutionary Economic Geography, and we relate this to the way Institutional Economic Geography tends to view institutions. From this discussion, a number of new research challenges are derived.
    Keywords: evolutionary economic geography, clusters, related variety, institutions, regional branching
    JEL: B25 B52 D85 L25 R0 R1
    Date: 2011–01
  2. By: Villena, Mauricio G.; Zecchetto, Franco
    Abstract: The main aim of this article is to investigate the behavioral consequences of the provision of subject-specific information in the group effort levels chosen by players in an experimental CPR game. We examine two basic treatments, one with incomplete information and the other with complete information. In the former, subjects are informed only about their own individual payoffs and the aggregate extraction effort level of the group, and in the latter they are also informed about the individual effort levels and payoffs of each subject. Given this setting, the basic question we attempt to answer is: Will the provision of subject-specific performance information (i.e. individual’s effort levels and payoffs) improve or worsen the tragedy of the commons (i.e. an exploitation effort level greater than the socially optimum level)? In order to motivate our hypotheses and explain our experimental results at the individual level, we make use of the theory of learning in games, which goes beyond standard non-cooperative game theory, allowing us to explore the three basic benchmarks in the commons context: Nash equilibrium, Pareto efficient, and open access outcomes. We use several learning and imitation theoretical models that are based on contrasting assumptions about the level of rationality and the information available to subjects, namely: best response, imitate the average, mix of best response and imitate the average, imitate the best and follow the exemplary learning rules. Finally, in order to econometrically test the hypotheses formulated from the theoretical predictions we use a random-effects model to assess the explanatory power of the different selected behavioral learning and imitation rules.
    Keywords: Common Property Resources; Information; Learning and Imitation; Experimental Economics.
    JEL: D83 C72 C91 Q2
    Date: 2010–01–09
  3. By: Judith Avrahami (The Hebrew University of Jerusalem, Center for the Study of Rationality and School of Education); Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group, Jena); Ralph Hertwig (University of Basel, Department of Psychology); Yaakov Kareev (The Hebrew University of Jerusalem, Center for the Study of Rationality and School of Education); Hironori Otsubo (Max Planck Institute of Economics, Strategic Interaction Group, Jena)
    Abstract: Whether behavior converges toward rational play or fair play in repeated ultimatum games depends on which player yields first. If responders concede first by accepting low offers, proposers would not need to learn to offer more, and play would converge toward unequal sharing. By the same token, if proposers learn fast that low offers are doomed to be rejected and adjust their offers accordingly, pressure would be lifted from responders to learn to accept such offers. Play would converge toward equal sharing. Here we tested the hypothesis that it is regret-both material and strategic-which determines how players modify their behavior. We conducted a repeated ultimatum game experiment with random strangers, in which one treatment does and another does not provide population feedback in addition to informing players about their own outcome. Our results show that regret is a good predictor of the dynamics of play. Specifically, we will turn to the dynamics that unfold when players make repeated decisions in the ultimatum game with randomly changing opponents, and when they learn not only about their own outcome in the previous round but also find out how the population on average has adapted to previous results (path dependence).
    Keywords: Ultimatum bargaining game, Reputation, Regret, Learning, Experiment
    JEL: C78 C92
    Date: 2010–12–15
  4. By: Al-Ubaydli, Omar; Jones, Garett; Weel, Jaap
    Abstract: Coordination games have become a critical tool of analysis in fields such as development and institutional economics. Understanding behavior in coordination games is an important step towards understanding the differing success of teams, firms and nations. This paper investigates the relationship between personal attributes (cognitive ability, risk-aversion, patience) and behavior and outcomes in coordination games, an issue that, to the best of our knowledge, has never been studied before. For the repeated coordination game that we consider, we find that: (1) cognitive ability has no bearing on any aspect of behavior or outcomes; (2) pairs of players who are more patient are more likely to coordinate well and earn higher payoffs; and (3) risk-aversion has no bearing on any aspect of behavior or outcomes. These results are robust to controlling for personality traits and demographic characteristics.
    Keywords: Coordination; IQ; personality; discount rate; patience; risk-aversion
    JEL: D23 D02 O12
    Date: 2010–12–29

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