nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2011‒01‒30
eight papers chosen by
Matthew Baker
City University of New York

  1. Group Norms and Consumer Behaviour By Pillai, Rajasekharan; Rajan, Jainey S.; Variyamveettil, Sunitha; Mathew, Dhanu E.; Nath , Subodh S.
  2. Dominance and Submission: Social Status Biases Economic Sanctions By von Essen, Emma; Ranehill, Eva
  3. Smart and Dangerous: How Cognitive Skills Drive the Intergenerational Transmission of Retaliation By Henry, Ruby
  4. Cognitive abilities and behavior in strategic-form games.* By Ralph-C. Bayer; Ludovic Renou
  5. Evolutionary strategic beliefs and financial markets By Elyès Jouini; Clotilde Napp; Yannick Viossat
  6. Cultural Transmission, Discrimination and Peer Effects By Sáez-Martí, Maria; Zenou, Yves
  7. Group Identity and Relation-Specific Investment: An Experimental Investigation By Hodaka Morita; Maroš Servátka
  8. Sketching Envy from Philosophy to Psychology By Jérémy Celse

  1. By: Pillai, Rajasekharan; Rajan, Jainey S.; Variyamveettil, Sunitha; Mathew, Dhanu E.; Nath , Subodh S.
    Abstract: The impact of group norms on forming consumer behaviour is an important attribute of man’s social life. The market segmentation principles acknowledge the presence of this phenomenon. People belong to different age group, professional status, income levels, educational status etc. are seemed to display some specific consumer behaviour that can be attributed to a particular group. The present study attempts to find the influence of certain selected group norms on consumption pattern.
    Keywords: Group norms; peer influence; consumer behaviour; culture and consumption; social norms
    JEL: M31
    Date: 2011–01
  2. By: von Essen, Emma (Dept. of Economics, Stockholm University); Ranehill, Eva (Stockholm School of Economics)
    Abstract: Social hierarchy is persistent in all almost all societies. Social norms and their enforcement are part of sustaining hierarchical systems. This paper combines social status and norm enforcement, by introducing status in a dictator game with third party punishment. Status is conveyed by surname; half of the third parties face dictators with a noble name and half face dictators with a common name. Receivers all have common names. We find that social status has an impact on behavior. Our results indicate that low status men are punished to a greater extent than low status women, high status men, or high status women. Interestingly, discrimination occurs only in male to male interaction. For offers below half, or almost half of the allocated resource, male third parties punish male dictators with common names almost twice as much as their noble counterparts. We find no support for female discrimination. This result suggests that social status has important implications for men’s decisions to use economic punishment, and that this holds true in situations where reputation or strategic concerns have no importance.
    Keywords: Status; punishment; discrimination
    JEL: C91
    Date: 2011–01–17
  3. By: Henry, Ruby (IZA)
    Abstract: A need exists to understand how people develop an aggressive, retaliatory conflict resolution policy vs. a more passive reconciliation stance. I contribute a choice-theoretic model that explains how cognitive skills drive the transmission of conflict resolution policies. A child’s resolution policy depends on parental effort and the influence of the outside environment. The model has the implication that high-cognitive parents socialize children to their conflict resolution culture more successfully than parents with low cognitive skills. Indeed, I test the model using the cognitive skills and conflict resolution skills of parents and children from the UK National Childhood Development Survey. I find that the parent’s effort is reinforced by the prevalence of their conflict resolution values in society. The data confirm that children of retaliating high-cognitive parents are more likely to be socialized to that resolution culture than children of low-cognitive retaliating parents when retaliation is more prominent in society.
    Keywords: socioemotional skills, cultural transmission, family influence
    JEL: D10 I20 J13
    Date: 2010–12
  4. By: Ralph-C. Bayer; Ludovic Renou
    Abstract: This paper investigates the relation between cognitive abilities and behavior in strategic-form games with the help of a novel experiment. The design allows us first to measure the cognitive abilities of subjects without confound and then to evaluate their impact on behaviour in strategic-from games. We find that subjects with better cognitive abilities show more sophisticated behavior and make better use of information on cognitive abilities and preferences of opponents. Although we do not find evidence for Nash behavior, observed behaviour is remarkably sophisticated, as almost 80% of subjects behave near optimal and outperform Nash behavior with respect to expected pay-offs.
    Keywords: cognitive ability; behaviours; strategic-form games; experiments; preferences; sophistication
    JEL: C70 C91
    Date: 2011–01
  5. By: Elyès Jouini (CEREMADE - CEntre de REcherches en MAthématiques de la DEcision - CNRS : UMR7534 - Université Paris Dauphine - Paris IX); Clotilde Napp (CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique, DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris Dauphine - Paris IX); Yannick Viossat (CEREMADE - CEntre de REcherches en MAthématiques de la DEcision - CNRS : UMR7534 - Université Paris Dauphine - Paris IX)
    Abstract: We provide a discipline for belief formation through a model of subjective beliefs, in which agents hold strategic beliefs. More precisely, we consider beliefs as a strategic variable that agents can choose (consciously or not) in order to maximize their utility at the equilibrium. These strategic beliefs result from an evolutionary process. We find that evolutionary strategic behavior leads to belief subjectivity and heterogeneity. Optimism (resp. overconfidence) as well as pessimism (resp. doubt) both emerge from the evolution process. Furthermore, we obtain a positive correlation between pessimism (rep. doubt) and risk-tolerance. We analyse the equilibrium characteristics. Under reasonable assumptions, the consensus belief is pessimistic and, as a consequence, the risk premium is higher than in a standard setting.
    Keywords: Beliefs formation, strategic beliefs, optimal beliefs, distorded beliefs, pessimism, risk premium
    Date: 2010–12–08
  6. By: Sáez-Martí, Maria (University of Zurich); Zenou, Yves (Department of Economics, Stockholm University and Research Institute of Industrial Economics)
    Abstract: Workers can have good or bad work habits. These traits are transmitted from one generation to the next through a learning and imitation process which depends on parents’ investment on the trait and the social environment where children live. We show that, if a high enough proportion of employers have taste-based prejudices against minority workers, their prejudices are always self-fulfilled in steady state. Affirmative Action improves the welfare of minorities whereas integration is beneficial to minority workers but detrimental to workers from the majority group. If Affirmative Action quotas are high enough or integration is strong enough, employers’ negative stereotypes cannot be sustained in steady-state.
    Keywords: Ghetto culture; overlapping generations; rational expectations; multiple equilibria; peer effects
    JEL: J15 J71
    Date: 2011–01–24
  7. By: Hodaka Morita; Maroš Servátka (University of Canterbury)
    Abstract: The hold-up problem has played a central role in the study of firm boundaries that originated with the pathbreaking essay by Coase (1937). This paper studies a previously unexplored mechanism through which integration could resolve the hold-up problem. Based on Tajfel and Turner’s (1979) social identification theory, we conjecture that team membership increases the degree of altruism towards another team member, and this in turn helps resolving the hold-up problem. We test this conjecture in a laboratory experiment. Our subjects are randomly divided into two teams and given their respective team uniforms to wear. In Task 1 they answer two trivia questions and can use a chat program to help their team members. In Task 2 the subjects play a standard hold-up game with a member of their own team (representing integration) or with a member of the other team (non-integration). We find that team membership significantly increases the investment rate as well as the share of the surplus offered back to the investor and thus mitigates the hold-up problem.
    Keywords: altruism; experiment; hold-up problem; identity; integration; other-regarding preferences; relation-specific investment; team membership
    JEL: C91 D20 L20
    Date: 2011–01–19
  8. By: Jérémy Celse
    Abstract: What is envy and how can we define it so as to incorporate the emotion in economic models? Through referring on philosophical and psychological researches, this paper aims at deriving a stable and concise definition of the emotion of envy. Philosophy allows us to define the elements that form envy and to disentangle the latter from other emotions. Researches on psychology help us in understanding the affective and behavioural responses of the emotion. We conclude that envy arises from any unflattering social comparison that threatens individual self-evaluation and includes a depressive and a hostile dimension. We also discuss whether the behaviour induced by envy results in destructive or in emulative actions. We will disentangle the elements that might explain why envy does not always exert the subject to adopt a hostile attitude toward the envied.
    Date: 2010

This nep-evo issue is ©2011 by Matthew Baker. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.