nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2011‒06‒25
eight papers chosen by
Matthew Baker
City University of New York

  1. When do people cooperate? The neuroeconomics of prosocial decision making By Declerck C.H.; Boone Ch.; Emonds G.
  2. Empathy, Guilt-Aversion and Patterns of Reciprocity By Vittorio Pelligra
  3. The roles of incentives and voluntary cooperation for contractual compliance By Simon Gaechter; Esther Kessler; Manfred Koenigstein
  4. Properties of an economy without human beings By Kakarot-Handtke, Egmont
  5. When normative and descriptive diverge: how to bridge the difference By Jose-Luis Pinto-Prades; Jose-Maria Abellan-Perpiñan
  6. Double, Double Toil and Trouble: An Investigation on Occult Forces Expenditures in Southern Benin By Philippe Lemay-Boucher; Vincent Somville; Joël Noret
  7. Peer Reporting and the Perception of Fairness By Douhou, S.; Magnus, J.R.; Soest, A.H.O. van

  1. By: Declerck C.H.; Boone Ch.; Emonds G.
    Abstract: Understanding the roots of prosocial behavior is an interdisciplinary research endeavor that has generated an abundance of empirical data across many disciplines. This review integrates research findings from different fields into a theoretical framework that can account for when prosocial behavior is likely to occur. Specifically, we propose that the motivation to cooperate is generated by the reward system in the brain (extending from striatum to the ventromedial prefrontal cortex), and that it can be modulated by two neural networks: a cognitive control system (centered on the lateral prefrontal cortex) that processes extrinsic cooperative incentives, and/or a social cognition system (including the superior temporal sulcus, the anterior medial frontal cortex and the amygdala) that processes trust signals. The independent modulatory influence of incentives and trust on the decision to cooperate is substantiated by a growing body of neuroimaging data and reconciles the apparent paradox between economic versus social rationality in the literature, suggesting that we are in fact wired for both. Furthermore, the theoretical framework can account for substantial behavioral heterogeneity in prosocial behavior. Based on the existing data, we further postulate that self-regarding individuals (who are more likely to adopt an economically rational strategy) are more responsive to extrinsic cooperative incentives and therefore rely relatively more on cognitive control to make (un)cooperative decisions, whereas other-regarding individuals (who are more likely to adopt a socially rational strategy) are more sensitive to trust signals to avoid betrayal and recruit relatively more brain activity in the social cognition system.
    Date: 2011–06
  2. By: Vittorio Pelligra
    Abstract: This paper reports the results of an experiment aimed at investigating the link between empathy, anticipated guilt and pro-social behavior. In particular we test the hypothesis that empathy modulates the anticipatory effect of guilt in bargaining situations and, more specifically, that it correlates with subjects’ willingness to give and to repay trust in an investment game. We also control for the effect of individual risk attitude. Our main results show that empathy significantly influences players’ pattern of restitution in the investment game and that risk-propensity weakly affects the decision to trust; we also find a significant gender difference in the distribution of empathy. These results seem to indicate that empathy affects pro-social behavior in a more complex way than previously hypothesized by existing models of social preferences.
    Keywords: Trust; Reciprocity; Guilt-Aversion; Empathy
    JEL: C78 C91 D63
    Date: 2011
  3. By: Simon Gaechter (University of Nottingham); Esther Kessler (University College London); Manfred Koenigstein (Universitaet Erfurt)
    Abstract: Efficiency under contractual incompleteness often requires voluntary cooperation in situations where self-regarding incentives for contractual compliance are present as well. Here we provide a comprehensive experimental analysis based on the gift-exchange game of how explicit and implicit incentives affect cooperation. We first show that there is substantial cooperation under non-incentive compatible contracts. Incentive-compatible contracts induce best-reply effort and crowd out any voluntary cooperation. Further experiments show that this result is robust to two important variables: experiencing Trust contracts without any incentives and implicit incentives coming from repeated interaction. Implicit incentives have a strong positive effect on effort only under non-incentive compatible contracts.
    Keywords: principal-agent games; gift-exchange experiments; incomplete contracts, explicit incentives; implicit incentives; repeated games; separability; experiments
    JEL: C70 C90
    Date: 2011–06
  4. By: Kakarot-Handtke, Egmont
    Abstract: Standard economics starts with behavioral axioms and arrives at conclusions about the equilibrium properties of the economy as a whole at point t. The present paper employs objective structural axioms and random changes in order to determine the conditions for market clearing and budget balancing in the pure consumption economy until the limit t→∞. From the conditions of stochastic supersymmetry six simple behavioral rules are derived that guarantee the desired outcome. These rules contrast with actual behavior and this explains why the plans and expectations of economic man are many times frustrated.
    Keywords: New framework of concepts; Structure-centric; Axiom set; Random consumption economy; Evolutionary properties; Benchmark process; Stochastic supersymmetry; Structural laissez-faire
    JEL: D50 E30 E40 E20
    Date: 2011–06–13
  5. By: Jose-Luis Pinto-Prades (Department of Economics, Universidad Pablo de Olavide); Jose-Maria Abellan-Perpiñan (Department of Applied Economics, Universidad de Murcia)
    Abstract: Revealed preferences are not consistent. Many anomalies have been found in different contexts. This finding leads to a divergence between normative and descriptive analyses. There are several ways of facing this problem. In this paper we argue in favour of debiasing observed choices in such a way that the “true” preferences are discovered. Our procedure is based on quantitative corrections derived from assuming the descriptive validity of prospect theory and the normative validity of Expected Utility. Those corrective formulas were first applied by Bleichrodt et al. (2001). We explain here how such formulas can be used to avoid inefficient allocation of health care resources. This approach shares the philosophy of Libertarian Paternalism (LP). However, it reduces some of the potential problems of LP: the definition of error (and the need to nudge people) is more clear and objective. In this sense, it reduces the chances that the regulator tries to nudge people toward behaviour based on her preferences and not on subject’s own preferences.
    Keywords: Social debiasing, true preferences, prospect theory, discovered preferences hypothesis, libertarian paternalism.
    JEL: I10
    Date: 2011–06
  6. By: Philippe Lemay-Boucher (Heriot-Watt University); Vincent Somville; Joël Noret (Université Libre de Bruxelles)
    Abstract: In many African societies, beliefs in `occult forces' play a crucial role in mobilizing powerful social energies. Anthropologists, and more recently economists, have also stressed the importance of magico-religious practices in supporting redistributive norms and the important role played by these norms in (and against) economic development. This study is the first to use quantitative evidence about the recourse to magico-religious protection. We measure expenditures in protection, using first-hand data collected in Benin. These expenditures are widespread and independent of people's education, religion and ethnicity. They are as high as 6% of the household head's income, and 4,5% of the total household income, on average, and exceed the expenditures made on important items such as school furnitures or electricity. We show that the main factors that affect the recourse to magico-religious protection are economic success and the death of relatives, colleagues or friends. Moreover, we find that redistribution of income and protection are substitutes: economically successful people who do not make gifts to their relatives and acquaintances tend to resort more heavily to magico-religious protection.
    Date: 2011–04
  7. By: Douhou, S.; Magnus, J.R.; Soest, A.H.O. van (Tilburg University, Center for Economic Research)
    Abstract: Economic motives are not the only reasons for committing a (small) crime. People consider social norms and perceptions of fairness before judging a situation and acting upon it. If someone takes a bundle of printing paper from the office for private use at home, then a colleague who sees this can either report it or not: peer reporting. We investigate how fairness perception influences peer reporting in this situation of incorrect behavior.
    Keywords: Peer reporting;Perception;Social norms;Fairness;Employee theft;Victimization.
    JEL: C35 D63 K42
    Date: 2011
  8. By: Jason Collins (UWA Business School, The University of Western Australia); Boris Baer (Plant Energy Biology ARC Centre of Excellence, The University of Western Australia); Ernst Juerg Weber (UWA Business School, The University of Western Australia)
    Abstract: This paper presents a quantitative analysis of the model developed in Galor and Moav, Natural Selection and the Origin of Economic Growth (2002), in which agents vary genetically in their preference for quality and quantity of children. We simulate a parametric form of the model, enabling examination of the transition from Malthusian stagnation to modern rates of economic growth. The simulations allow an assessment of the strength of the biological foundations of the model and demonstrate the susceptibility of the modern high-growth state to invasion by cheaters. Extending the model from two to three genotypes suggests the possibility of a return to Malthusian conditions rather than a permanent state of modern growth.
    Date: 2011

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