nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2011‒11‒01
eleven papers chosen by
Matthew Baker
City University of New York

  1. Effects of Parental Background on Other-Regarding Preferences in Children By Bauer, Michal; Chytilová, Julie; Pertold-Gebicka, Barbara
  2. Trust, reciprocity and altruism: An impossible addition By Di Bartolomeo Giovanni; Stefano Papa
  3. One Step at a Time: Does Gradualism Build Coordination? By Sam Asher; Lorenzo Casaburi; Plamen Nikolov
  4. Behavioural Economics: Classical and Modern By Selda (Ying Fang) Kao; K. Vela Velupillai
  5. Learning in Networks - An Experimental Study using Stationary Concepts By Siegried K. Berninghaus; Thomas Neumann; Bodo Vogt
  6. Economics and psychology.Perfect rationality versus bounded rationality By Schilirò , Daniele
  7. Come misurare fiducia, reciprocità e altruismo By Stefano Papa
  8. Spite and Cognitive Skills in Preschoolers By Elisabeth Bügelmayer; C. Katharina Spieß
  9. Do Women Prefer a Co-operative Work Environment? By Peter Kuhn; Marie-Claire Villeval
  10. Evolutionarily Stable Strategies in Sports Contests By Martin Grossmann
  11. On the Evolutionary Stability of Rational Expectations By William R. Parke; George A. Waters

  1. By: Bauer, Michal (Charles University, Prague); Chytilová, Julie (Charles University, Prague); Pertold-Gebicka, Barbara (Charles University, Prague)
    Abstract: Other-regarding preferences are central for the ability to solve collective action problems and thus for society's welfare. We study how the formation of other-regarding preferences during childhood is related to parental background. Using binary-choice dictator games to classify subjects into other-regarding types, we find that children of less educated parents are less altruistic and more spiteful. This link is robust to controlling for a range of child, family, and peer characteristics, and is attenuated for smarter children. The results suggest that less educated parents are either less efficient to instill social norms or their children less able to acquire them.
    Keywords: other-regarding preferences, altruism, spite, experiments with children, family background, education
    JEL: C91 D64
    Date: 2011–10
  2. By: Di Bartolomeo Giovanni; Stefano Papa
    Abstract: This paper attempts to measure conditional and unconditional other-regarding preferences in two versions of an investment game: a canonical one and a cheap-talk variant where some pre-play is also allowed (i.e., non-binding unilateral messages). We find that counter-factual measures, as the well-known triadic design (Cox, 2004 [G&EB]) may systematically fail in distinguishing between conditional and unconditional other-regarding preferences due to the existence of frame effects. Specifically, by using indirect methods, we document conditional other-regarding preferences that are systematically neglected by the triadic approach. By inspecting result from the cheap-talk variant of the game, we also find that messages have no effect on average, but they affect the participants’ behavior leading to a polarization of their choices.
    Keywords: Conditional and unconditional other-regarding preferences, trust, reciprocity, investment game, frame effect, polarization effect, cheap talk
    JEL: C91 D83
    Date: 2011–10
  3. By: Sam Asher; Lorenzo Casaburi; Plamen Nikolov (Harvard University)
    Abstract: We study how gradualism -- increasing required levels (“thresholds”) of contributions slowly over time rather than requiring a high level of contribution immediately -- affects individuals’ decisions to contribute to a public project. Using a laboratory binary choice minimum-effort coordination game, we randomly assign participants to three treatments: starting and continuing at a high threshold, starting at a low threshold but jumping to a high threshold after a few periods, and starting at a low threshold and gradually increasing the threshold over time (the “gradualism” treatment). We find that individuals coordinate most successfully at the high threshold in the gradualism treatment relative to the other two groups. We propose a theory based on belief updating to explain why gradualism works. We also discuss alternative explanations such as reinforcement learning, conditional cooperation, inertia, preference for consistency, and limited attention. Our findings point to a simple, voluntary mechanism to promote successful coordination when the capacity to impose sanctions is limited.
    Keywords: Gradualism; Coordination; Cooperation; Public Goods; Belief-based Learning; Laboratory Experiment
    Date: 2011–10
  4. By: Selda (Ying Fang) Kao; K. Vela Velupillai
    Abstract: In this paper, the origins and development of behavioural economics, beginning with the pioneering works of Herbert Simon (1953) and Ward Edwards (1954), is traced, described and (critically) discussed, in some detail. Two kinds of behavioural economics – classical and modern – are attributed, respectively, to the two pioneers. The mathematical foundations of classical behavioural economics is identified, largely, to be in the theory of computation and computational complexity; the corresponding mathematical basis for modern behavioural economics is, on the other hand, claimed to be a notion of subjective probability (at least at its origins in the works of Ward Edwards). The economic theories of behavior, challenging various aspects of 'orthodox' theory, were decisively influenced by these two mathematical underpinnings of the two theories
    Keywords: Classical Behavioural Economics, Modern Behavioural Economics, Subjective Probability, Model of Computation, Computational Complexity. Subjective Expected Utility
    JEL: C61 C63 D81 D83
    Date: 2011
  5. By: Siegried K. Berninghaus (Karlsruhe Institute of Technology (KIT), Institute for Economic Theory and Statistics); Thomas Neumann (Otto-von-Guericke-University Magdeburg, Faculty of Economics and Management, Empirical Economics); Bodo Vogt (Otto-von-Guericke-University Magdeburg, Faculty of Economics and Management, Empirical Economics)
    Abstract: Our study analyzes theories of learning for strategic interactions in networks. Participants played two of the 2 x 2 games used by Selten and Chmura (2008) and in the comment by Brunner, Camerer and Goeree (2009). Every participant played against four neighbors and could choose a different strategy against each of them. The games were played in two network structures: a attice and a circle. We compare our results with the predictions of different theories (Nash equilibrium, quantal response equilibrium, action-sampling equilibrium, payoff-sampling equilibrium, and impulse balance equilibrium) and the experimental results of Selten and Chmura (2008). One result is that the majority of players choose the same strategy against each neighbor. As another result we observe an order of predictive success for the stationary concepts that is different from the order shown by Selten and Chmura. This result supports our view that learning in networks is different from learning in random matching.
    Keywords: experimental economics, networks, learning
    JEL: C70 C73 C91 D83 D85
    Date: 2011–10–19
  6. By: Schilirò , Daniele
    Abstract: Classical mathematical algorithms often fail to identify in time when the international financial crises occur although, as the classical theory of choice would suggest, the economic agents are rational and the markets are or should be efficient and behave also rationally. This contribution does not pretend to give a complete answer to these questions, but it will highlight some well-known limits of the classical theory of rational choice and compare this theory of choice with the approach that seeks to combine economics and psychology and that has established itself as cognitive or behavioral economics. In particular, the present paper will focus on the juxtaposition of the concepts of perfect rationality and bounded rationality. It concludes with some references to the literature of behavioral finance which has given important contributions in explaining the behavior and the anomalies of financial markets.
    Keywords: Bounded rationality; procedural rationality; rational choice; cognitive economics
    JEL: D81 B52 C00 D83
    Date: 2011–10
  7. By: Stefano Papa
    Abstract: Questo paper illustra dal punto di vista sperimentale come la letteratura ha affrontato il problema della misurazione della fiducia, reciprocità e altruismo (conditional and unconditional other-regarding preferences) nel gioco dell’investimento.
    Keywords: Conditional and unconditional other-regarding preferences, trust, reciprocity, investment game
    JEL: C91 D83
    Date: 2011–09
  8. By: Elisabeth Bügelmayer; C. Katharina Spieß
    Abstract: Although spiteful preferences play a crucial role in the development of human large-scale cooperation, there is little evidence on spiteful behavior and its determinants in children. We investigate the relationship between children’s cognitive skills and spiteful behavior in a sample of 214 preschoolers aged 5-6 and their mothers. Other-regarding behavior of both mothers and children is elicited through four simple allocation decisions. A key advantage of our study is that it is carried out in a household context. Therefore, we have information about both the child’s and mother’s cognitive and noncognitive skills as well as health and household characteristics. We find that higher cognitive skills are associated with more spiteful behavior in children. This relationship is even more pronounced among boys and possibly reflects differences in competitiveness. Moreover, we find further gender differences depending on the measure of cognitive skills and the degree of spite. These results shed light on the determinants of the development of other-regarding preferences in humans.
    Keywords: Spite, other-regarding preferences, cognitive skills, child experiments, household survey studies
    JEL: C90 C99 J24
    Date: 2011
  9. By: Peter Kuhn (Department of Economics, University of California - University of California, Santa Barbara); Marie-Claire Villeval (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure de Lyon)
    Abstract: Are women disproportionately attracted to work environments where cooperation rather than competition is rewarded? This paper reports the results of a real-effort experiment in which participants choose between an individual compensation scheme and a team-based payment scheme. We find that women are more likely than men to select team-based compensation in our baseline treatment, but women and men join teams with equal frequency when we add an efficiency advantage to team production. Using a simple structural discrete choice framework to reconcile these facts, we show that three elements can account for the observed patterns in the team-entry gender gap: (1) a gender gap in confidence in others (i.e. women are less pessimistic about their prospective teammates' relative ability), (2) a greater responsiveness among men to instrumental reasons for joining teams, and (3) a greater "pure" preference for working in a team environment among women.
    Keywords: Gender; cooperation; self-selection; confidence; experiment
    Date: 2011
  10. By: Martin Grossmann (Department of Business Administration, University of Zurich)
    Abstract: Abstract: In the recent years, many clubs in the biggest European soccer leagues have run into debts. The sports economic literature provides several explanation for this development, e.g., the league structure (open versus closed league), club constitutions, ruinous rat races between clubs. While the majority of the articles presume the well-known Nash equilibrium concept, I apply evolutionary game theory in a sports contest model. If clubs follow evolutionarily stable strategies (ESS), then ESS generate higher investments and lower profits than predicted by Nash strategies independent of win maximizing or profit maximizing clubs. Overdissipation of the rent is possible for Nash strategies as well as for ESS.
    Keywords: Contest, evolutionary stable strategies, utility maximization, team sports league
    JEL: C72 C73 D74 L13 L83
    Date: 2011–10
  11. By: William R. Parke (Department of Economics, University of North Carolina); George A. Waters (Department of Economics, Illinois State University)
    Abstract: Evolutionary game theory provides a fresh perspective on the prospects that agents with heterogeneous expectations might eventually come to agree on a single expectation corresponding to the efficient markets hypothesis. We establish conditions where agreement on a unique forecast is stable, but also show that persistent heterogeneous expectations can arise if those conditions do not hold. The critical element is the degree of curvature in payoff weighting functions agents use to value forecasting performance. We illustrate our results in the context of an asset pricing model where a martingale solution competes with the fundamental solution for agents’ attention.
    Keywords: rational expectations, hetergeneous expectations, evolutionary game theory, asset pricing, efficient markets hypothesis
    JEL: C73 D84 G12 C22
    Date: 2011–10

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