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on Evolutionary Economics |
| By: | Pierre Courtois; Rabia Nessah; Tarik Tazdaït |
| Abstract: | Social interactions regularly lead to mutually beneficial transactions that are sometimes puzzling. The prisoner’s dilemma and the chicken and trust games prove to be less perplexing than Nash equilibrium predicts. Moral preferences seem to complement self-oriented motivations and their relative predominance in games is found to vary according to the individuals, their environment, and the game. This paper examines the appropriateness of Berge equilibrium to study several 2×2 game situations, notably cooperative games where mutual support yields socially better outcomes. We consider the Berge behavior rule complementarily to Nash: individuals play one behavior rule or another, depending on the game situation. We then define non-cooperative Berge equilibrium, discuss what it means to play in this fashion, and argue why individuals may choose to do so. Finally, we discuss the relationship between Nash and Berge notions and analyze the rationale of individuals playing in a situational perspective. |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:lam:wpaper:11-05&r=evo |
| By: | Stoop, Jan; van Soest, Daan; Vyrastekova, Jana |
| Abstract: | Peer-to-peer sanctions increase cooperation in multi-person social dilemmas (Fehr & Gachter (2000)), but not when subjects have the option to retaliate (Nikiforakis (2008)). One-shot peer-to-peer rewards have been found to enhance efficiency too (Vyrastekova & van Soest (2008), Rand et al. (2009a)), but it is an open question whether the positive impact on cooperation is weakened or strengthened when we allow for counterrewarding. We examine the impact of possible reciprocity in rewarding on cooperation in a non-linear public bad game, and find that efficiency in the social dilemma is equally low as absent any reward options. We hypothesize that subjects are unwilling to sever mutually profitable bilateral exchanges of reward tokens to induce cooperation in the social dilemma, and identify the underlying mechanism by comparing behavior across three matching protocols. |
| Keywords: | Social dilemmas; economic experiments; rewards. |
| JEL: | C92 D74 C72 |
| Date: | 2011–03–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:30538&r=evo |
| By: | Pradiptyo, Rimawan; Sasmitasiwi, Banoon; Sahadewo, Gumilang Aryo |
| Abstract: | This paper aims to analyze subjects’ behavior in an experiment on evolutionary process of prisoners’ dilemma game. The experiment has been designed by using sixteen one-shot prisoners’ dilemma games with payoffs perturbation and random matching players under perfect information. The subjects of the experiment were students and staff in Universitas Gadjah Mada, Indonesia. In contrast to previous studies, for instance Selten and Stoecker’s (1986) Cooper’s, et.al (1991, 1996), the majority of the subjects in this experiment tend to choose Nash equilibrium strategy consistently from the first game. The result showed that the proportion of the Nash equilibrium outcome was consistently in the range of 85%-88%, whereas the tacit cooperation or Pareto optimum outcome was about 1%-2%. There were evidence that payoffs perturbation influences players’ decision. In contrast to the previous studies above, the results from this study revealed that the vast majority of the subjects tend to choose the dominant strategy as prescribed in Game Theory. |
| Keywords: | Prisoners' dilemma; experiment; random-matching players; payoffs perturbation; framing effect |
| JEL: | C92 C73 |
| Date: | 2011–02–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:30480&r=evo |
| By: | Pierre Courtois; Tarik Tazdaït |
| Abstract: | What if living in a relatively trustworthy society was sufficient to blindly trust strangers? In this paper we interpret generalized trust as a learning process and analyse the trust game paradox in light of the replicator dynamics. Given that trust inevitably implies doubts about others, we assume incomplete information and study the dynamics of trust in buyer-supplier purchase transactions. Considering a world made of “good” and “bad” suppliers, we show that the trust game admits a unique evolutionarily stable strategy: buyers may trust strangers if, on the whole, it is not too risky to do so. Examining the situation where some players may play, either as trustor or as trustee, we show that this result is robust. |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:lam:wpaper:11-06&r=evo |
| By: | Martorana, Marco (University of Catania, Department of Economics and Quantitative Methods); Mazza, Isidoro (University of Catania, Department of Economics and Quantitative Methods) |
| Abstract: | Dynamic models of learning and adaptation have provided realistic predictions in terms of voting behavior. This study aims at contributing to their scant empirical verification. We develop a learning algorithm based on bounded rationality estimating the pattern of learning process through a two-stage econometric model. The analysis links voting behavior to past choices and economic satisfaction derived from previous period election and state of the economy. This represents a novelty in the literature on voting that assumes given voter preferences. Results show that persistence is positively affected by the combination of income changes and past behavior and by union membership. |
| Keywords: | voting; bounded rationality; learning; political accountability |
| JEL: | C23 C25 D72 |
| Date: | 2010–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:demqwp:2010_006&r=evo |
| By: | Bisin, Alberto (New York University); Patacchini, Eleonora (La Sapienza University of Rome, Einaudi Institute for Economics and Finance (EIEF) and CEPR.); Verdier, Thierry (Paris School of Economics (PSE) and CEPR); Zenou, Yves (Dept. of Economics, Stockholm University) |
| Abstract: | We develop a dynamic model of identity formation that explains why ethnic minorities may choose to adopt oppositional identities (i.e. some individuals may reject or not the dominant culture) and why this behavior may persist over time. We first show that the prevalence of an oppositional culture in the minority group cannot always be sustained in equilibrium. Indeed, because the size of the majority group is larger, there is an “imposed” process of exposition to role models from the majority group that favors the diffusion of mainstream values in the minority community. In spite of this, an oppositional culture in the minority group can nevertheless be sustained in steady-state if there is enough cultural segmentation in terms of role models, or if the size of the minority group is large enough, or if the degree of oppositional identity it implies is high enough. We also demonstrate that the higher the level of harassment and the number of racist individuals in the society, the more likely an oppositional minority culture will emerge. We finally show that ethnic identity and socialization effort can be more intense in mixed rather than segregated neighborhoods. |
| Keywords: | Ethnicity; role models; peer effects; cultural transmission; racism |
| JEL: | A14 J15 |
| Date: | 2011–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sunrpe:2011_0016&r=evo |
| By: | Czap, Hans; Czap, Natalia; Khachaturyan, Marianna; Burbach, Mark; Lynne, Gary |
| Abstract: | Common-pool resources and other shared resources frequently suffer from overextraction/overuse and associated negative externalities. In this paper we design a framed laboratory experiment on downstream water pollution to investigate (a) the importance of framing in determining the behavior of upstreamers regarding the negative externalities, and (b) the potential of downstreamers to influence the choices of upstreamers using non-monetary sanctions and rewards, alleviating the need for intervention by the local governments and regulatory institutions. Our results show that framing has a significant impact on the behavior of subjects. Subjects behaved more profit-oriented in the self-interest framing and more egalitarian in the empathy framing. In addition, we show that nudging subjects to âwalk in the shoes of othersâ significantly increased empathetic behavior. Lastly, negative emotional feedback is a powerful tool for changing behavior of subjects towards more environmentally friendly and empathetic behavior. Interestingly, positive emotional feedback is counterproductive in that it instead decreases environmentally friendly and empathetic behavior. In general our results indicate that explicit emotional feedback, even though not expressed by everyone, works similarly to the implicit appeal to emotions through framing. |
| Keywords: | empathy framing, self-interest framing, emotions, water pollution, environmental experiment, reward and punishment., Environmental Economics and Policy, Institutional and Behavioral Economics, Land Economics/Use, C9, D03, Q25, Q53, Q57, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea11:102696&r=evo |
| By: | Czap, Natalia V.; Czap, Hans J.; Khachaturyan, Marianna; Lynne, Gary D.; Burbach, Mark E. |
| Abstract: | This paper further tests dual interest theory and the metaeconomics approach to environmental choice, recognizing a possible role for empathy-sympathy (the basis for an internalized, shared other-interest) in tempering and conditioning the more fundamental tendency to pursue self-interest. To test, we focus on rivers flowing through agricultural areas carrying sediments, chemicals, and fertilizers which are making their way into downstream rivers and lakes. We use data from a framed experiment. Farmers decide on the usage of conservation technology to lessen impacts on the water quality in downstream areas, which is more costly. The results confirm our hypotheses, demonstrating that upstream farmers who practice conservation are tempering profit maximization with empathy-based, environmentally conscious behavior that better serves the farmersâ own-interest, and thus also serves downstream users. Environmental economics models need to explicitly include empathy-sympathy and the moral-ethical context it produces, providing a more scientific basis for conservation policy and programs. |
| Keywords: | dual-interest model, metaeconomics, empathy, sympathy, selfism, environmental experiment, behavioral economics, water quality, conservation tillage, conservation policy, Environmental Economics and Policy, Institutional and Behavioral Economics, C9, D03, Q25, Q53, Q57., |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea11:102866&r=evo |
| By: | Kauffman, Nathan; Hayes, Dermot |
| Abstract: | The utility maximization problem of a grain producer is formulated and solved numerically under prospect theory as an alternative to expected utility theory. Conventional theory posits that the optimal hedging position of a producer is not affected solely due to changes in the level of futures prices. However, a strong degree of positive correlation is apparent in the data. Our results show that with prospect theory serving as the underlying behavioral framework, the optimal hedge of a producer is affected by changes in futures price levels. The implications of this price-induced hedging behavior on spot prices and volatility are subsequently considered. |
| Keywords: | futures markets, hedging, prospect theory, risk preferences, Agribusiness, Institutional and Behavioral Economics, Risk and Uncertainty, D03, D81, G11, Q13, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea11:103242&r=evo |
| By: | Schipper, Burkhard C |
| Abstract: | Morris (1996, 1997) introduced preference-based definitions of knowledge of belief in standard state-space structures. This paper extends this preference-based approach to unawareness structures (Heifetz, Meier, and Schipper, 2006, 2008). By defining unawareness and knowledge in terms of preferences over acts in unawareness structures and showing their equivalence to the epistemic notions of unawareness and knowledge, we try to build a bridge between decision theory and epistemic logic. Unawareness of an event is behaviorally characterized as the event being null and its negation being null. |
| Keywords: | unawareness; awareness; knowledge; preferences; subjective expected utility theory; decision theory; null event |
| JEL: | C70 D82 D80 C72 |
| Date: | 2011–04–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:30221&r=evo |