nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2011‒11‒14
nine papers chosen by
Matthew Baker
City University of New York

  1. Group Outcomes And Reciprocity By Ioannou, Christos A.; Qi, Shi; ,; Rustichini, Aldo
  2. Creativity, Analytical Skills, Personality Traits, and Innovation Game Behavior in the Lab: An Experiment By Agnes Bäker; Werner Güth; Kerstin Pull; Manfred Stadler
  3. Effects of exclusion on social preferences By Sven Fischer; Werner Güth
  4. Sandbagging By Matthias Kräkel
  5. The Wrong Type of Pluralism: Toward a Transdisciplinary Social Science By Dave Colander
  6. Prospect Theory around the World By Rieger, Marc Oliver; Wang, Mei; Hens, Thorsten
  7. Laws and Norms By Roland Benabou; Jean Tirole
  8. Would You Mind if I Get More? An Experimental Study of the Envy Game By Sandro Casal; Werner Güth; Mofei Jia; Matteo Ploner
  9. How Time Preferences Differ: Evidence from 45 Countries By Wang, Mei; Rieger, Marc Oliver; Hens, Thorsten

  1. By: Ioannou, Christos A.; Qi, Shi; ,; Rustichini, Aldo
    Abstract: Group membership affects an agent's individual behavior. We determine how, by testing two competing hypotheses. One is that group membership operates through social identity, and the other is that group membership implements a correlation among the actions of in-group members in response to an implicit signal. We introduce two novel features in the experimental design. The first feature is the display of group outcomes. This allows us to assess directly the importance of relative group performance on subjects' decisions. The second is a careful manipulation of the Dictator game and the Trust game. More specifically, we choose parameters strategically so as to ensure no change in the pecuniary incentives across the two games. For a precise quantitative test of the two hypotheses we develop a structural model to describe an agent's behavior across treatments. Our findings suggest that the role of social identity on motivating agents' decisions has been exaggerated. The display of group outcomes induces a group effect, but a careful analysis of this effect reveals that participants use group outcomes as a signal to coordinate in-group members on favorable outcomes. Furthermore, we find evidence in support of recent experimental studies which demonstrate that an agent's allocation choice is sensitive to the behavior of the agent that generated the choice set.
    Date: 2011–05–01
  2. By: Agnes Bäker (University of Tübingen, Department of Business and Economics); Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group); Kerstin Pull (University of Tübingen, Department of Business and Economics); Manfred Stadler (University of Tübingen, Department of Business and Economics)
    Abstract: nnovative behavior is mostly studied theoretically, e.g., in models of patent races, and empirically, e.g., by using R&D or patent data. This research, however, is only poorly informed about the psychological tradition of creativity research. Our study is an attempt to experimentally collect behavioral data revealing in how far creativity, analytical skills, personality traits and innovation game behavior in the lab are interrelated. With the help of a within-subject design we find that participants' performance in the innovation games is in fact related to their creativity, risk tolerance and self-control. Other personality traits such participants' anxiety, independence, tough-mindedness and extraversion, if any, only play a minor role, and the same is true for participants' analytical skills.
    Keywords: Creativity, personality traits, innovation games, experiments
    JEL: C91 L13 O31
    Date: 2011–11–09
  3. By: Sven Fischer (Max Planck Institute for Research on Collective Goods, Bonn); Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group)
    Abstract: In three party ultimatum games the proposer can first decide whether to exclude one responder, what increases the available pie. The experiments control for intentionality of exclusion and veto power of the third party. We do not find evidence for indirect reciprocity of the remaining responder after the exclusion of the other. Similarly, not excluding the second responder is only insignificantly reciprocated by it. Overall, we find little evidence that intentional exclusion has substantial effects on behavior.
    Keywords: Exclusion, bargaining, ultimatum game, social preferences, experiment
    JEL: C91 J52
    Date: 2011–11–07
  4. By: Matthias Kräkel
    Abstract: Participants of dynamic competition games may prefer to play with the rules of the game by systematically withholding e¤ort in the beginning. Such behavior is referred to as sandbagging. I consider a two-period con- test between heterogeneous players and analyze potential sandbagging of high-ability participants in the first period. Such sandbagging can be ben- eficial to avoid second-period matches against other high-ability opponents. I characterize the conditions under which sandbagging leads to a coordina- tion problem, similar to that of the battle-of-the sexes game. Moreover, if players' abilities have a stronger impact on the outcome of the first-period contest than e¤ort choices, mutual sandbagging by all high-ability players can arise.
    Keywords: ecoordination problem, dynamic contest, heterogeneous contestants, withholding e¤ort
    JEL: C72 D72
    Date: 2011–11
  5. By: Dave Colander
    Abstract: When heterodox economists talk of pluralism they generally are talking about pluralism within the economics professionÑthey are asking: how can we have a more pluralistic economics profession? This paper argues that another, perhaps more useful, way to think of pluralism and economics is from the perspective of all the social sciences. When looked in reference to the social science profession rather than in reference to the economics profession, the amount of pluralism increases significantly, since different social sciences follow quite different methodologies. But looking at pluralism from the social science perspective reveals a different type of pluralism problem in social science. While there may be plenty of pluralism within social science as a whole, there is a serious question about whether it is appropriately distributed. This paper argues that heterodox economistÕs agenda should be a greater blending of all the social science departments. It summarizes proposals to do so on both the undergraduate level and graduate level, and explains why supporting variations of these proposals would be a strategy that would further the objectives of most heterodox economists more so than would their current strategy of pushing for more pluralism in economics.
    Keywords: Pluralism; heterodox; social science; epistemic game theory
    JEL: A2 B4 B5
    Date: 2011–11
  6. By: Rieger, Marc Oliver (Dept. IV, Business Administration, University of Trier); Wang, Mei (WHU - Otto Beisheim School of Management); Hens, Thorsten (Department of Banking and Finance, University of Zurich)
    Abstract: We present results from the first large-scale international survey on risk preferences, conducted in 45 countries. We show substantial cross-country differences in risk aversion, loss aversion and probability weighting. Moreover, risk attitudes in our sample depend not only on economic conditions, but also on cultural factors, as measured by the Hofstede dimensions Individuality and Uncertainty Avoidance. The presented data might also serve as an interesting starting point for further research in cultural economics.
    Keywords: Risk preferences; prospect theory; cross-cultural comparison
    JEL: D90 F40
    Date: 2011–10–31
  7. By: Roland Benabou; Jean Tirole
    Abstract: This paper analyzes how private decisions and public policies are shaped by personal and societal preferences ("values"), material or other explicit incentives ("laws") and social sanctions or rewards ("norms"). It first examines how honor, stigma and social norms arise from individuals' behaviors and inferences, and how they interact with material incentives. It then characterizes optimal incentive-setting in the presence of norms, deriving in particular appropriately modified versions of Pigou and Ramsey taxation. Incorporating agents' imperfect knowledge of the distribution of preferences opens up to analysis several new questions. The first is social psychologists' practice of "norms-based interventions", namely campaigns and messages that seek to alter people’s perceptions of what constitutes "normal" behavior or values among their peers. The model makes clear how such interventions operate but also how their effectiveness is limited by a credibility problem, particularly when the descriptive and prescriptive norms conflict. The next main question is the expressive role of law. The choices of legislators and other principals naturally reflect their knowledge of societal preferences, and these same "community standards" are also what shapes social judgments and moral sentiments. Setting law thus means both imposing material incentives and sending a message about society's values, and hence about the norms that different behaviors are likely to encounter. The analysis, combining an informed principal with individually signaling agents, makes precise the notion of expressive law, determining in particular when a weakening or a strengthening of incentives is called for. Pushing further this logic, the paper also sheds light on why societies are often resistant to the message of economists, as well as on why they renounce certain policies, such as "cruel and unusual" punishments, irrespective of effectiveness considerations, in order to express their being "civilized".
    JEL: D64 D82 H41 K1 K42 Z13
    Date: 2011–11
  8. By: Sandro Casal (School of Social Sciences, University of Trento); Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group); Mofei Jia (School of Social Sciences, University of Trento); Matteo Ploner (DECO-CEEL, University of Trento)
    Abstract: Envy is often the cause of mutually harmful outcomes. We experimentally study the impact of envy in a bargaining setting in which there is no conflict in material interests: a proposer, holding the role of residual claimant, chooses the size of the pie to be shared with a responder, whose share is exogenously fixed. Responders can accept or reject the proposal, with game types differing in the consequences of rejection: all four combinations of (not) self-harming and (not) other-harming are considered. We find that envy leads responders to reject high proposer claims, especially when rejection harms the proposer. Notwithstanding, maximal claims by proposers are predominant for all game types. This generates conflict and results in a considerable loss of efficiency.
    Keywords: Social Preferences, Conflict, Experimental Economic,, Bargaining
    JEL: D63 D74 C91 C72
    Date: 2011–11–04
  9. By: Wang, Mei (WHU - Otto Beisheim School of Management); Rieger, Marc Oliver (Dept. IV, Business Administration, University of Trier); Hens, Thorsten (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)
    Abstract: We present results from the first large-scale international survey on time discounting, conducted in 45 countries. Cross-country variation cannot simply be explained by economic variables such as interest rates or in ation. In particular, we find strong evidence for cultural differences, as measured by the Hofstede cultural dimensions. For example, high levels of Uncertainty Avoidance or Individualism are both associated with strong hyperbolic discounting. Moreover, as application of our data, we find evidence for an impact of time preferences on the capability of technological innovations in a country and on environmental protection.
    Keywords: Time preferences; Intertemporal decision; Endogenous preference; Cross-cultural comparison
    JEL: D90 F40
    Date: 2011–10–31

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