nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2011‒12‒13
eleven papers chosen by
Matthew Baker
City University of New York

  1. Group outcomes and reciprocity By Ioannou, Christos; Qi, Shi; Rustichini, Aldo
  2. Effects of Parental Background on Other-regarding Preferences in Children By MIchal Bauer; Julie Chytilova; Barbara Pertold-Gebicka
  3. Do People Keep Socially Unverifiable Promises? By Cary Deck; Maroš Servátka; Steven Tucker
  4. Conflicted Minds: Recalibrational Emotions Following Trust-based Interaction. By Eric Schniter; Roman M. Sheremeta; Timothy Shields
  5. The Effect of Religion on Cooperation and Altruistic Punishment: Experimental Evidence from Public Goods Experiments By Akay, Alpaslan; Karabulut, Gökhan; Martinsson, Peter
  6. Imperfect public monitoring with costly punishment - An experimental study By Attila Ambrus; Ben Greiner
  7. The Dynamics of Continuous Cultural Traits in Social Networks By Berno Buechel; Tim Hellmann; Michael M. Pichler
  8. Laws and Norms By Bénabou, Roland; Tirole, Jean
  9. On Large Games with a Bio-Social Typology By M. Ali Khan; Kali P. Rath; Yeneng Sun; Haomiao Yu
  10. Symbols, Group Identity and the Hold-up Problem By Hodaka Morita; Maroš Servátka
  11. Cluster Evolution and a Roadmap for Future Research By Ron Boschma; Dirk Fornahl

  1. By: Ioannou, Christos; 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. <br><br> Keywords; groups, trust game, dictator game, reciprocity
    Date: 2011–04–08
  2. By: MIchal Bauer; Julie Chytilova; Barbara Pertold-Gebicka
    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 D03 D64 I24
    Date: 2011–10
  3. By: Cary Deck; Maroš Servátka (University of Canterbury); Steven Tucker (University of Canterbury)
    Abstract: Previous research has suggested that communication and especially promises increase cooperation in laboratory experiments. This has been taken as evidence for internal motivations such as guilt aversion or preference for promise keeping. The original goal of this paper was to examine promises under a double blind payoff procedure to test the alternative explanation that promise keeping was due to external influence and reputational concerns. We find no evidence that communication increases the overall level of cooperation in our double blind experiment. However, our results are due in part to the high level of cooperation that we observe, leading us to conduct additional single blind conditions. Ultimately, we find no evidence that communication or payoff procedures impact aggregate cooperation.
    Keywords: Anonymity; experiment; promises; partnership; guilt aversion; psychological game theory; trust; lies; social distance; behavioral economics; hidden action
    JEL: C70 C91
    Date: 2011–12–01
  4. By: Eric Schniter (Economic Science Institute, Chapman University); Roman M. Sheremeta (Argyros School of Business and Economics, Chapman University); Timothy Shields (Argyros School of Business and Economics, Chapman University)
    Abstract: Consistent with a modular view of the mind, both short-sighted and long-sighted programs may be simultaneously active in the mind and in conflict with one another when individuals face choice dilemmas in trust-based economic interactions. Recalibrational theory helps us identify the adaptive design features shared among subsets of superordinate emotion programs. According to this design logic and the computation of adaptive problem features produced by Trust games, we predict the activation of emotions after Trust games. While this study successfully predicts reports of twenty distinct emotional states, further studies are needed to demonstrate ultimate recalibrational functions of emotions.
    Keywords: emotions, recalibrational theory, modularity, Trust game, experiments
    Date: 2011
  5. By: Akay, Alpaslan (IZA); Karabulut, Gökhan (Istanbul University); Martinsson, Peter (University of Gothenburg)
    Abstract: This paper experimentally examines how religious festivals and the degree of religiosity affect cooperation and altruistic punishment by using public goods experiments. We conducted the experiments in Turkey at different points in time; one on the most religious day during Ramadan (the Night of Power – Laylat al-Qadr) and the other at a time without any religious festivals other than the normal daily prayers. The overall results show no differences in cooperation or altruistic punishment among individuals during Ramadan, even when the degree of their religiosity varied. However, less religious people did change their cooperative behaviour in response to religious festivals. Most of the differences can, however, be explained by differences in beliefs about others contributions. By and large, this indicates the importance of conditional cooperation.
    Keywords: cooperation, experiment, public goods, punishment, religion
    JEL: C72 C91 H41
    Date: 2011–11
  6. By: Attila Ambrus (Department of Economics, Harvard University); Ben Greiner (School of Economics, The University of New South Wales)
    Abstract: This paper experimentally investigates the effects of a costly punishment option on cooperation and social welfare in long finitely repeated public good contribution games. In a perfect monitoring environment increasing the severity of the potential punishment monotonically increases both contributions and the average net payoffs of subjects. In a more realistic imperfect monitoring environment, we find a U-shaped relationship between the severity of punishment and average net payoffs. Access to a standard punishment technology in this setting significantly decreases net payoffs, even in the long run. Access to a very severe punishment technology leads to roughly the same payoffs as with no punishment option, as the benefits of increased cooperation offset the social costs of punishing.
    Keywords: public good contribution experiments; imperfect monitoring; welfare implications of costly punishment
    JEL: C72 C92 H41
    Date: 2011–08
  7. By: Berno Buechel (University of Hamburg); Tim Hellmann (Institute of Mathematical Economics, Bielefeld University); Michael M. Pichler (Institute of Mathematical Economics, Bielefeld University)
    Abstract: We consider an OLG model (of a socialization process) where continuous traits are transmitted from an adult generation to the children. A weighted social network describes how children are influenced not only by their parents but also by other role models within the society. Parents can invest into the purposeful socialization of their children by strategically displaying a cultural trait (which need not coincide with their true trait). Based on Nash equilibrium behavior, we study the dynamics of cultural traits throughout generations. We provide conditions on the network structure that are sufficient for long-run convergence to a society with homogeneous subgroups. In the special case of quadratic utility, the condition is that each child is more intensely shaped by its parents than by the social environment. The model is akin to the classical DeGroot model of opinion formation which we generalize by allowing for strategic interaction.
    Keywords: cultural transmission, social networks, preference formation, cultural persistence, opinion dynamics
    Date: 2011–12
  8. By: Bénabou, Roland; Tirole, Jean
    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 judgements 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".
    Keywords: culture; esteem; expressive content; honor; incentives; law; motivation; norms-based interventions; punishments; reputation; social norms; stigma; taxation
    JEL: D64 D82 H41 K1 K42 Z13
    Date: 2011–11
  9. By: M. Ali Khan; Kali P. Rath; Yeneng Sun; Haomiao Yu
    Abstract: We present a comprehensive theory of large non-anonymous games in which agents have a name and a determinate social-type and/or biological trait to resolve the dissonance of a (matching-pennies type) game with an exact pure-strategy Nash equilibrium with finite agents, but without one when modeled on the Lebesgue unit interval. We (i) establish saturated player spaces as both necessary and sufficient for an existence result for Nash equilibrium in pure strategies, (ii) clarify the relationship between pure, mixed and behavioral strategies via the exact law of large numbers in a framework of Fubini extension, (iii) illustrate corresponding asymptotic results.
    Date: 2011–12
  10. By: Hodaka Morita; Maroš Servátka (University of Canterbury)
    Abstract: Groups, companies, and organizations identify themselves via symbols. Symbols have the potential to create group identity and at the same time create group boundaries, thus allowing for achieving the benefits of cooperation by ingroup members. We use a laboratory experiment to study the role of group identity, created by the use of symbols, in mitigating the hold-up problem. As a team symbol we employ color t-shirts. We find that the usage of t-shirts itself does not create a strong enough group identity to mitigate the hold-up problem. However, in our previous research, we found that group identity created by t-shirts and a group chat aimed to help team members to solve a task is capable of resolving the hold-up problem. These findings are consistent with the everyday practice where organizations often make significant investments in team-building and socialization activities, suggesting that an important objective of such activities might be to strengthen group identity so that it is effective even in highly strategic environments.
    Keywords: altruism; experiment; group identity; hold-up problem; other-regarding preferences; relation-specific investment; symbols; team membership
    JEL: C91 D20 L20
    Date: 2011–11–30
  11. By: Ron Boschma; Dirk Fornahl
    Abstract: There is increasing recognition that the existence of clusters can only be understood when studying their dynamics over time (Audretsch and Feldman 1996; Pouder and St. John 1996; Swann et al. 1998; Maggioni 2002; Brenner 2004; Iammarino and McCann 2006; Menzel and Fornahl 2010; Ter Wal and Boschma 2011). In fact, clusters may be best understood as products of a path-dependent process (Martin and Sunley 2006). In that context, scholars have described the main features of cluster development over time, and have explored the driving forces behind their evolution. In their seminal contribution, Menzel and Fornahl (2010) proposed a cluster life cycle model in which firms enter and exit the cluster, capabilities of cluster firms develop and interact (and might converge), and inter-organizational linkages within and beyond the cluster are established and dissolved along the cluster life cycle.
    Keywords: Downward causation, Economic landscape, emergence, Evolution, Supervenience
    JEL: B15 R11 R12
    Date: 2011–08

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