nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2011‒04‒30
eight papers chosen by
Matthew Baker
City University of New York

  1. Normative Conflict & Feuds: The Limits of Self-Enforcement By Nikos Nikiforakis; Charles N. Noussair; Tom Wilkening
  2. Mixing the Carrots with the Sticks: Are Punishment and Reward Substitutes By Helen Mitchell; Nikos Nikiforakis
  3. Institutions, distributed cognition and agency: rule-following as performative action By Herrmann-Pillath, Carsten
  4. An Unlucky Feeling: Persistent Overestimation of Absolute Performance with Noisy Feedback By Grossman, Zachary
  5. Evolution and the Growth Process: Natural Selection of Entrepreneurial Traits By Oded Galor; Stelios Michalopoulos
  6. An Empirical Evaluation of an Evolutionary Game Theory Model of the Labor Market By Araujo, Ricardo Azevedo; Loureiro, Paulo Roberto; Souza, Nathalia Almeida
  7. Economic Growth, Technical Progress, and Social Capital: the Inverted U Hypothesis By Antoci, Angelo; Sabatini, Fabio; Sodini, Mauro
  8. How important is cultural background for the level of intergenerational mobility? By Schnitzlein, Daniel D.

  1. By: Nikos Nikiforakis; Charles N. Noussair; Tom Wilkening
    Abstract: A normative conflict arises when there exist multiple plausible norms of behavior. In such cases, norm enforcement can lead to a sequence of mutual retaliatory sanctions, which we refer to as a feud. We investigate the hypothesis that normative conflict enhances the likelihood of a feud in a public-good experiment. We find that punishment is much more likely to trigger counter-punishment and start a feud when there is a normative conflict, than in a setting in which no conflict exists. While the possibility of a feud sustains cooperation,the cost of feuding fully offsets the efficiency gains from increased cooperation.
    Keywords: normative conflict; peer punishment; feuds; counter-punishment; social norms
    JEL: C92 D70 H41
    Date: 2011
  2. By: Helen Mitchell; Nikos Nikiforakis
    Abstract: This paper presents evidence that the demand for costly norm enforcement can be affected by the availability of the means for enforcing the norm. Participants in a laboratory experiment can reward or punish to enforce a distribution norm. Controlling for the extent of norm violation, we find that demand for costly punishment is lower when participants also have the opportunity to reward norm adherence. Similarly, demand for costly reward is lower when participants can punish norm violations, controlling for the extent of norm adherence. The reason is that participants use reward and punishment to signal their approval and disapproval. The availability of reward opportunities allows them to signal their disapproval by withholding reward. Similarly, the availability of punishment opportunities allows them to signal their approval by withholding punishment. This suggests that individuals consider reward and punishment to be substitutes. The resultant reduction in costly enforcement does not affect adherence to the norm, but has a significant impact on earnings in the experiment.
    Keywords: punishment; reward; social norms; norm enforcement; third party
    JEL: C91 D63 H41
    Date: 2011
  3. By: Herrmann-Pillath, Carsten
    Abstract: Recently, Aoki proposed the concept of substantive institutions which relates outcomes of strategic interaction with public representations of equilibrium states of games. I argue that the Aoki model can be grounded in theories of distributed cognition and performativity, which I put into the context of Searle's philosophical account of institutions. Substantive institutions build on regularized causal interactions between internal neuronal mechanisms and external facts, which are shared in a population of agents. Following Searle's proposal to conceive rule following as a neuronally anchored behavioral disposition, I show that his corresponding notion of collective intentionality can be grounded in recent neuroscience theories about imitation as the primordial process in human learning. I relate this with Searle's concept of status function and the neuronal theory of metaphors, resulting in a precise definition of rule-following as performative action. I present two empirical examples, the institution of money and status hierarchies in markets. --
    Keywords: Aoki's concept of substantive institutions,Searle,collective intentionality,emotions,imitation,performativity,sign systems
    JEL: B52 D02 D87
    Date: 2011
  4. By: Grossman, Zachary
    Abstract: How does overconfidence arise and persist in the face of experience and feedback? We examine experimentally how individuals' beliefs about their absolute, as opposed to relative, performance on a quiz react to noisy, but unbiased, feedback. Participants believe themselves to have received `unlucky' feedback and they overestimate their own scores, but they exhibit no overconfidence in non-ego-relevant beliefs---in this case, about others' scores. Unlike previous studies of relative performance estimates, we find this to be driven by overconfident priors, as opposed to biased updating, which suggests that social comparisons contribute to biased information processing. While feedback improves performance estimates, this learning does not translate into improved estimates of subsequent performances. This suggests that people use performance feedback to update their beliefs about their ability differently than they do to update their beliefs about their performance, contributing to the persistence of overconfidence.
    Keywords: overconfidence, feedback, overestimation, absolute performance, Bayesian updating, biased updating, information processing, learning transfer, cross-game learning, quadratic scoring rule, behavioral economics, experimental economics, Behavioral Economics
    Date: 2011–04–11
  5. By: Oded Galor; Stelios Michalopoulos
    Abstract: This research suggests that the evolution of entrepreneurial spirit played a signi?cant role in the process of economic development and the dynamics of inequality within and across societies. The study argues that entrepreneurial spirit evolved non-monotonically in the course of human history. In early stages of development, risk-tolerant, growth promoting traits generated an evolutionary advantage and their increased representation accelerated the pace of technological progress and the process of economic development. In mature stages of development, however, risk-averse traits gained an evolutionary advantage, di- minishing the growth potential of advanced economies and contributing to convergence in economic growth across countries.
    Keywords: Risk Aversion, Growth, Technological Progress, Evolution, Natural Selection
    Date: 2011
  6. By: Araujo, Ricardo Azevedo; Loureiro, Paulo Roberto; Souza, Nathalia Almeida
    Abstract: In this paper we intend to perform an empirical evaluation of the evolutionary game theory model of the labor market developed by Araujo and Souza (2010). In order to accomplish this task we focus on the Brazilian labor market by using data from the National Household Sampling Survey – PNAD/IBGE, from 1995 to 2008. We used four different methodologies: the OLS, Pseudo-panel with fixed effects, Instrumental Variables and the Heckman Selection Model. Results indicate that the main difference between the 1995-2002 and 2003-2008 period is the impact of education over wages. According to these findings, investments in education were more profitable for the 2003-2008 period. However, all wage gaps between formal and informal markets reduced considerably.
    Keywords: formal and informal and labor market; evolutionary game theory.
    JEL: C73 J23
    Date: 2011
  7. By: Antoci, Angelo; Sabatini, Fabio; Sodini, Mauro
    Abstract: We set up a theoretical framework to analyze the possible role of economic growth and technical progress in the erosion of social capital. Under certain parameters, the relationship between technical progress and social capital can take the shape of an inverted U curve. We show the circumstances allowing the economy to follow trajectories where the stock of social capital grows endogenously and unboundedly.
    Keywords: Social capital; technological progress; economic growth; social interactions
    JEL: O11 J22 O33 Z13 O12
    Date: 2011–04–15
  8. By: Schnitzlein, Daniel D.
    Abstract: Using results on brother correlations of different groups of second generation immigrants based on administrative data from Denmark, this note analyzes the role of cultural background in the determination of the level of intergenerational mobility. The estimated correlations indicate that cultural background is not an important factor for the level of intergenerational mobility. --
    Keywords: Intergenerational mobility,Sibling correlations
    JEL: J62
    Date: 2011

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