nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2011‒11‒21
eleven papers chosen by
Matthew Baker
City University of New York

  1. Economic incentives and social preferences: substitutes or complements? By Samuel Bowles; Sandra Polania-Reyes
  2. Risky Political Changes: Rational Choice vs Prospect Theory By Francesco Passarelli
  3. No place to hide: When shame causes proselfs to cooperate By Declerck C.H.; Boone Ch.; Kiyonari T.
  4. On Institutional Designs and Corruption by Imitation By Elvio Accinelli; Edgar Sanchez Carrera
  5. Belief Elicitation: A Horse Race among Truth Serums By Trautmann, S.T.; Kuilen, G. van de
  6. The Intergenerational Transmission of Human Capital: Exploring the Role of Skills and Health Using Data on Adoptees and Twins By Lundborg, Petter; Nordin, Martin; Rooth, Dan-Olof
  7. When are adaptive expectations rational? A generalization By Shepherd, Ben
  8. Smokers, Smoking Deprivation, and Time Discounting By Shoko Yamane; Hiroyasu Yoneda; Taiki Takahashi; Yoshio Kamijo; Yasuhiro Komori; Fumihiko Hiruma; Yoshiro Tsutsui
  9. Menstrual Cycle and Competitive Bidding By Pearson, Matthew; Schipper, Burkhard C.
  10. Shunning Uncertainty: The Neglect of Learning Opportunities By Trautmann, Stefan T.; Zeckhauser, Richard J.
  11. Social Participation and Hours Worked By Stefano Bartolini; Ennio Bilancini

  1. By: Samuel Bowles; Sandra Polania-Reyes
    Abstract: Explicit economic incentives designed to increase contributions to public goods and to promote other pro-social behavior sometimes are counterproductive or less effective than would be predicted among entirely self-interested individuals. This may occur when incentives adversely affect individuals’ altruism, ethical norms, intrinsic motives to serve the public, and other social preferences. In the 50 experimental studies that we survey these effects are common, so that incentives and social preferences may be either substitutes (crowding out) or complements. We provide evidence for four mechanisms that may account for these incentive effects on preferences, based on the fact that incentives may (i) provide information about the person who implemented the incentive, (ii) frame the decision situation so as to suggest appropriate behavior, (iii) compromise a control averse individual’s sense of autonomy and (iv) affect the process by which people learn new preferences. An implication of the fact that incentives affect preferences is that the evaluation of public policy must be restricted to allocations that are supportable as Nash equilibria when account is taken of these crowding effects. We show that well designed fines, subsidies and the like minimize crowding out and may even do the opposite, making incentives and social preferences complements rather than substitutes
    Keywords: Public goods, behavioral experiments, social preferences, endogenous preferences, motivational crowding, explicit incentive
    JEL: A13 C90 D02 D63 D64 H41 D78 E61 Z13
    Date: 2011–10
  2. By: Francesco Passarelli
    Abstract: This paper describes policy alternatives as lotteries, and studies how policy preferences are distorted by the cognitive anomalies postulated by Prospect Theory. Loss aversion induces a status quo bias. However, due to the reflection effect, the bias is asymmetric: too moderate attitudes toward a good reform or a good candidate, and too low severity toward bad politics. The reflection effect also determines low loyalty in partisan voting and weak concerns about partisan issues. Preferences about nonpartisan issues are independent of wealth because people use the status quo as a reference point. Ambitious platforms have more chances to pass than incremental and detailed changes because people are risk seeking in the realm of losses. In general, according to Prospect Theory the policy conflict within the society is smoother than under full rationality. Moreover, a pure majority system yields either prolonged conservatism or a radical abandonment of the status quo.
    Keywords: prospect theory, behavioral economics, voting behavior, behavioral political economy
    JEL: C9 D72 D81 H1
    Date: 2011–11
  3. By: Declerck C.H.; Boone Ch.; Kiyonari T.
    Abstract: Shame is often considered a moral emotion with action tendencies shaped by natural selection to elicit socially beneficial behavior. Yet, unlike guilt or other social emotions, prior experimental studies do not indicate that incidental shame boosts prosocial behavior. Based on the affect as information theory, we hypothesize that incidental feelings of shame increase cooperative behavior, but only for self-interested individuals, and only in situations where shame is relevant with regards to its action tendency of avoiding reputation losses. To test this hypothesis, cooperation levels are compared between a classic prisoner’s dilemma (where “defect” may result from multiple motives) and a sequential prisoner’s dilemma (where “defect” is the result of intentional greediness). The results indicate that, as hypothesized, proself individuals cooperate more following incidental shame, but only in a sequential prisoner’s dilemma. Hence ashamed proselfs become inclined to cooperate when they believe they have no way to hide their greediness, and not necessarily because they want to make up for earlier wrong-doing.
    Date: 2011–11
  4. By: Elvio Accinelli; Edgar Sanchez Carrera
    Abstract: Imitation is the sincerest form of flattery, and we claim the corruption is driven by imitative behavior for those agents facing an institutional design of corruption. So this paper analyzes an individual level approach and tackles the question of why people engage in corrupt exchange. We show that institutional design determines corruption and that there exists a threshold level in order to imitate the noncorrupt (honest) behavior.
    Keywords: Corrupt behavior; Evolutionary dynamics; Imitative behavior; Institutions and operations
    JEL: C72 C73 D02 K42 P37
    Date: 2011–09
  5. By: Trautmann, S.T.; Kuilen, G. van de (Tilburg University, Center for Economic Research)
    Abstract: In survey studies, probabilistic expectations about uncertain events are typically elicited by asking respondents for their introspective beliefs. If more complex procedures are feasible, beliefs can be elicited by incentive compatible revealed preference mechanisms (“truth serumsâ€). Various mechanisms have been proposed in the literature, which differ in the degree to which they account for respondents’ deviations from expected value maximization. In this paper, we pit non-incentivized introspection against five truth serums, to elicit beliefs in a simple two-player game. We test the internal validity (additivity and predictive power for own behavior), and the external validity (predictive power for other players’ behavior, or accuracy) of each method. We find no differences among the truth serums. Beliefs from incentivized methods are better predictors of subjects’ own behavior compared to introspection. However, introspection performs equally well as the truth serums in terms of accuracy and additivity.
    Keywords: belief measurement;subjective probability;scoring rules;outcome matching;probability matching;internal validity;external validity.
    JEL: D81 C91
    Date: 2011
  6. By: Lundborg, Petter (Lund University); Nordin, Martin (Lund University); Rooth, Dan-Olof (Linneaus University)
    Abstract: In this paper, we focus on possible causal mechanisms behind the intergenerational transmission of human capital. For this purpose, we use both an adoption and a twin design and study the effect of parents' education on their children's cognitive skills, non-cognitive skills, and health. Our results show that greater parental education increases children's cognitive and non-cognitive skills, as well as their health. These results suggest that the effect of parents' education on children's education may work partly through the positive effect that parental education has on children's skills and health.
    Keywords: intergenerational transmission, human capital, education, health, cognitive skills, non-cognitive skills, adoptees, twins
    JEL: I12 I11 J14 J12 C41
    Date: 2011–10
  7. By: Shepherd, Ben
    Abstract: This note presents a simple generalization of the adaptive expectations mechanism in which the learning parameter is time variant. It is shown that expectations generated in this way are rational in the sense of producing minimum mean squared forecast errors for a broad class of time series models, namely any process that can be written in linear state space form.
    Keywords: Adaptive Expectations; Rational Expectations; Kalman Filter
    JEL: C53 C22
    Date: 2011–10–25
  8. By: Shoko Yamane; Hiroyasu Yoneda; Taiki Takahashi; Yoshio Kamijo; Yasuhiro Komori; Fumihiko Hiruma; Yoshiro Tsutsui
    Abstract: This paper investigates whether smokers exhibit greater time discounting than non-smokers, and how short-term nicotine deprivation affects time discounting. A unique feature of our experiment is that our subjects receive rewards not only of money, but also of actual tobacco. This is done in order to elicit smokersf true preferences. Smokers are more impatient than non-smokers, consistent with previous studies. Additionally, nicotine deprivation makes smokers even more impatient. These results suggest that nicotine concentration has different effects on time preferences in the short and long runs.
    Date: 2011–11
  9. By: Pearson, Matthew (University of CA, Davis); Schipper, Burkhard C. (University of CA, Davis)
    Abstract: In an experiment using two-bidder first-price sealed bid auctions with symmetric independent private values and 400 participants, we collected information on the female participants' menstrual cycles and the use of hormonal contraceptives. We find that naturally cycling women bid significantly higher than men and earn significantly lower profits than men except during the midcycle when fecundity is highest. We suggest an evolutionary hypothesis according to which women are predisposed by hormones to generally behave more riskily during their fecund phase of their menstrual cycle in order to increase the probability of conception, quality of offspring, and genetic variety. We also find that women on hormonal contraceptives bid significantly higher and earn substantially lower profits than men. This may be due to progestins contained in hormonal contraceptives or a selection effect. We discuss how our study differs from Chen, Katuscak, and Ozdenoren (2009).
    JEL: C72 C91 C92 D44 D81 D87
    Date: 2011–11
  10. By: Trautmann, Stefan T. (Tilburg University); Zeckhauser, Richard J. (Harvard University)
    Abstract: Financial, managerial, and medical decisions often involve alternatives whose possible outcomes have uncertain probabilities. In contrast to alternatives whose probabilities are known, these uncertain alternatives offer the benefits of learning. In repeat-choice situations, such learning brings value. If probabilities appear favorable (unfavorable), a choice can be repeated (avoided). In a series of experiments involving bets on the colors of poker chips drawn from bags, decision makers often prove to be blind to the learning opportunities offered by uncertain probabilities. Such decision makers violate rational decision making and forgo significant expected payoffs when they shun uncertain alternatives in favor of risky ones. Worse, when information is revealed, many make choices contrary to learning. A range of factors explain these violations. The results indicate that priming with optimal strategies offers little improvement.
    JEL: C91 D81 D83 G11
    Date: 2011–11
  11. By: Stefano Bartolini; Ennio Bilancini
    Abstract: We investigate the relationship between social participation and the hours worked in the market. Social participation is the component of social capital that measures individuals’ engament in groups, associations and non-governmental organizations. We provide a model of consumer choice where social participation may be either a substitute or a complement to material consumption – depending on whether participation is instrumentally or non-instrumentally motivated – and where a local environment with greater social participation increases the return to individual participation. We carry out an empirical investigation of this framework using survey data on United States for the period 1972-2004. We find that non-instrumental social participation substantially decreases the hours worked, while instrumental social participation substantially increases them. Moreover, evidence is consistent with the idea that a local environment with greater social participation fosters individual social participation.
    Keywords: social participation, relational goods, social capital, work hours, instrumental and non-instrumental motivations
    JEL: A13 D62 J22 Z13
    Date: 2011–10

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