nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2012‒01‒25
seventeen papers chosen by
Matthew Baker
City University of New York

  1. Cognitive load in the multi-player prisoner's dilemma game By Duffy, Sean; Smith, John
  2. Rationality and choices in economics: behavioral and evolutionationary approaches By Graziano , Mario; Schilirò, Daniele
  3. The Emotional Consequences of Pro-social Behavior in Markets By Toke Fosgaard
  4. Evolutionarily stable in-group favoritism and out-group spite in intergroup conflict By Kai A. Konrad; Florian Morath
  5. Social Preferences in Private Decisions By Jona Linde; Joep Sonnemans
  6. Strong, Bold, and Kind: Self-Control and Cooperation in Social Dilemmas By Kocher, Martin G.; Martinsson, Peter; Myrseth, Kristian Ove R.; Wollbrant, Conny
  7. Altruism, Cooperation, and Efficiency: Agricultural Production in Polygynous Households By Akresh, Richard; Chen, Joyce J.; Moore, Charity
  8. Time Horizon and Cooperation in Continuous Time By Maria Bigoni; Marco Casari; Andrzej Skrzypaczx; Giancarlo Spagnolo
  9. Those Outsiders: How Downstream Externalities Affect Public Good Provision By Sarah Jacobson; Jason Delaney
  10. The Good of the Few: Reciprocity in the Provision of a Public Bad By Sarah Jacobson; Jason Delaney
  11. Learning in experimental 2 x 2 games By Thorsten Chmura; Sebastian Goerg; Reinhard Selten
  12. Who Acts More Like a Game Theorist? Group and Individual Play in a Sequential Market Game and the Effect of the Time Horizon By Wieland Mueller; Fangfang Tan
  13. Social identity and competitiveness By Dargnies, Marie-Pierre
  14. Redistribution and the cultural transmission of the taste for fairness By Gilles Le Garrec;
  15. Aspirations of the middle class: voting on redistribution and status concerns By Kai A. Konrad; Florian Morath
  16. A Mass Phenomenon: The Social Evolution of Obesity By Strulik, Holger
  17. Is culture a determinant of financial development? By Dutta, Nabamita; Mukherjee, Deepraj

  1. By: Duffy, Sean; Smith, John
    Abstract: We find that differences in the ability to devote cognitive resources to a strategic interaction imply differences in strategic behavior. In our experiment, we manipulate the availability of cognitive resources by applying a differential cognitive load. In cognitive load experiments, subjects are directed to perform a task which occupies cognitive resources, in addition to making a choice in another domain. The greater the cognitive resources required for the task implies that fewer such resources will be available for deliberation on the choice. Although much is known about how subjects make decisions under a cognitive load, little is known about how this affects behavior in strategic games. We run an experiment in which subjects play a repeated multi-player prisoner's dilemma game under two cognitive load treatments. In one treatment, subjects are placed under a high cognitive load (given a 7 digit number to recall) and subjects in the other are placed under a low cognitive load (given a 2 digit number). We find that the behavior of the subjects in the low load condition converges to the Subgame Perfect Nash Equilibrium prediction at a faster rate than those in the high load treatment. However, we do not find the corresponding relationship involving outcomes in the game. Specifically, there is no evidence of a significantly different convergence of game outcomes across treatments. As an explanation of these two results, we find evidence that low load subjects are better able to condition their behavior on the outcomes of previous periods.
    Keywords: cognitive resources; experimental economics; experimental game theory; public goods game
    JEL: C72 C91
    Date: 2012–01–11
  2. By: Graziano , Mario; Schilirò, Daniele
    Abstract: The paper critically discusses the issue of rationality and choices in economics in both the behavioural and evolutionary approaches. Our study aims, on the one hand, to highlight the scientific contributions of psychology in economics, since psychology, and with it the theoretical approach of the behavioral economics, has made more complex and problematic the analysis of economic choices, showing the limits of rationality. On the other hand, the work offers a reinterpretation of the theory of Alfred Marshall in a biologicalevolutionary perspective. The reinterpretation of Marshall's theory in a evolutionary perspective aims to show that, historically, economics has not been a discipline aligned in a homogenous way to a single and undifferentiated thought, locked into the idea of perfect rationality, but, on the opposite, is a discipline that has enriched itself and continually is enriching by contributions and significant contaminations with other research fields.
    Keywords: rationality; choices; behavioral economics; evolutionary theories; biology;
    JEL: D03 D81 B52 D90 B13 D01
    Date: 2012–01
  3. By: Toke Fosgaard (Institute of Food and Resource Economics, University of Copenhagen)
    Abstract: Pro-social behavior made when buying private goods is becoming increasingly popular. Several findings from behavioral and experimental economics however emphasizes that people are less pro-social in such situations, compared to pro-social decisions in non-market contexts. This paper suggests that emotional responses are important explanations of this finding. It is first argued that the emotional response to a pro-social decision combined with private good purchase is different from the response to a similar decision in a non-market situation. Through evidence from a laboratory experiment, it is then found, that deciding on a social choice in a market exchange involves a less positive emotional reaction to others, compared to non-market situations. Moreover, subjects in market contexts are found to be less responsive to other subjects’ contribution behavior, relative to the non-market contexts.
    Keywords: Emotions; market exchange; pro-social behavior
    JEL: C92 H41 M14
    Date: 2011–12
  4. By: Kai A. Konrad; Florian Morath
    Abstract: We study conflict between two groups of individuals. Using Schaffer's (1988) concept of evolutionary stability we provide an evolutionary underpinning for in-group altruism combined with spiteful behavior towards members of the rival out-group. We characterize the set of evolutionarily stable combinations of in-group favoritism and out-group spite and find that an increase in in-group altruism can be balanced by a decrease in spiteful behavior towards the out-group.
    Keywords: altruism, spite, in-group favoritism, conflict, evolutionary stability, indirect evolutionary approach
    Date: 2011–06
  5. By: Jona Linde (University of Amsterdam, CREED); Joep Sonnemans (University of Amsterdam, CREED)
    Abstract: Social preference models were originally constructed to explain two things: why people spend money to affect the earnings of others and why the income of others influences reported happiness. We test these models in a novel experimental situation where participants face a risky decision that affects only their own earnings. In the social (individual) treatment participants do (not) observe the earnings of others. In the social treatment gambles therefore not only affect absolute but also relative earnings. Outcome-based social preference models therefore predict a treatment difference. We find that decisions are generally the same in both treatments, in line with rule-based social preference models, like procedural fairness.
    Keywords: fairness; social preferences; decision making under risk; experiment
    JEL: C91 D63 D81
    Date: 2012–01–09
  6. By: Kocher, Martin G. (Dept of Economics, University of Munich, and CESifo Munich, and Dept of Economics, University of Gothenburg); Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University); Myrseth, Kristian Ove R. (ESMT European School of Technology and Management); Wollbrant, Conny (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We develop a model relating self-control, risk preferences and conflict identification to cooperation patterns in social dilemmas. We subject our model to data from an experimental public goods game and a risk experiment, and we measure conflict identification and self-control. As predicted, we find a robust association between self-control and higher levels of cooperation, and the association is weaker for more risk-averse individuals. Free riders differ from other contributor types only in their tendency not to have identified a self-control conflict in the first place. Our model accounts for the data at least as well as do other models.<p>
    Keywords: self-control; cooperation; public good; risk; experiment
    JEL: C91 D03 H40
    Date: 2012–01–18
  7. By: Akresh, Richard (University of Illinois at Urbana-Champaign); Chen, Joyce J. (Ohio State University); Moore, Charity (Ohio State University)
    Abstract: Altruism among family members can, in some cases, inhibit cooperation by increasing the utility that players expect to receive in a non-cooperative equilibrium. To test this, we examine agricultural productivity in polygynous households in West Africa. We find that cooperation is greater – production is more efficient – among co-wives than among husbands and wives because co-wives are less altruistic towards each other. The results are not driven by scale effects or self-selection into polygyny. Nor can they be explained by greater propensity for cooperation among women generally or by the household head acting as an enforcement mechanism for others' cooperative agreements.
    Keywords: altruism, non-cooperative behavior, household bargaining, polygyny, Africa
    JEL: D13 D70 J12 O13 O55
    Date: 2011–12
  8. By: Maria Bigoni (Department of Economics, University of Bologna); Marco Casari (Department of Economics, University of Bologna); Andrzej Skrzypaczx (Graduate School of Business, Stanford University); Giancarlo Spagnolo (SITE, Tor Vergata, EIEF and CEPR)
    Abstract: Frequent interaction may dramatically increase subjects ability to cooperate. In an experiment, we study the impact of different time horizons on cooperation in (quasi) continuous time prisoner's dilemmas. We find that cooperation levels are similar or higher when the horizon is deterministic rather than stochastic. Moreover, a de- terministic duration generates different aggregate patterns and indi- vidual strategies than a stochastic one. For instance, the data reveal a higher initial cooperation and a strong end-of-period reversal to defection under a deterministic horizon. However, they suggest that subjects do not learn to apply backward induction but to postpone defection closer to the end.
    Date: 2011
  9. By: Sarah Jacobson (Williams College); Jason Delaney (University of Arkansas at Little Rock)
    Abstract: Some policy problems pit the interests of one group against those of another group. One group may, for example, determine the provision of a project (such as a power plant or a dam) that benefits group members but has downstream externalities that hurt people outside the group. We introduce a model of projects with such asymmetries. In-group members may contribute to a common fund that benefits them as a public good. In the model, benefits from the project may or may not vary within the group. Project provision has negative downstream externalities: common fund contributions hurt agents outside the in-group (“Outsiders”) rendering common fund contributions anti-social overall. Many models of social preferences predict that such externalities should reduce or eliminate project provision, although conditional cooperation or a preference for in-group members may counteract this effect. We test this model with a lab experiment. With homogeneous in-group benefits, the presence of negative downstream externalities reduces contribution levels by nearly half. We introduce a rotating high-return position that allows subjects to trade favors. Contributions diminish only slightly with the introduction of the negative externality and reciprocal giving occurs whether or not Outsiders are present.
    Keywords: public bad, public good, social preferences, reciprocity, externalities, in-group-out-group, parochial altruism
    JEL: C91 D01 D62 D71 H41 Q50
    Date: 2012–01
  10. By: Sarah Jacobson (Williams College); Jason Delaney (University of Arkansas at Little Rock)
    Abstract: People have been shown to engage in favor-trading when it is efficiency-enhancing to do so. Will they also trade favors when it reduces efficiency, as in a series of wasteful public projects that each benefits an individual? We introduce the “Stakeholder Public Bad” game to study this question. In each round, contributions to a common fund increase the earnings of one person (the “Stakeholder”) but reduce the earnings of the rest of the group so much that overall efficiency is reduced. The Stakeholder position rotates through members of the group and the promise of the high reward associated with this position may enable subjects to behave reciprocally. We hypothesize that some people will help a current Stakeholder by contributing in hopes of being rewarded later with a reciprocal gift. In a lab experiment, we find evidence of such favor trading. We also find that Stakeholders in this situation seem perfectly willing to sacrifice the good of the group to reap their own personal rewards, and this is true even when their contribution decisions are public. While the revelation of information about others’ actions and roles has previously been shown to enable efficiency-increasing reciprocity, we show that it also enables efficiency-decreasing reciprocal acts. Subjects who are more risk-averse behave in a way that is more myopically self-interested as compared to less risk-averse people when information conditions preclude favor trading, and subjects who identify with the Democratic Party show more restraint when they are Stakeholder than those who do not.
    Keywords: logrolling, social preferences, reciprocity, externalities, public bad, public good
    JEL: C91 D01 D62 D64 D72 H41
    Date: 2012–01
  11. By: Thorsten Chmura (Department of Economics, Ludwig-Maximilians-Universitat Munich); Sebastian Goerg (Max Planck Institute for Research on Collective Goods, Bonn); Reinhard Selten (cLaboratory for Experimental Economics (BonnEconLab), University of Bonn)
    Abstract: In this paper, we introduce two new learning models: impulse-matching learning and action-sampling learning. These two models together with the models of self-tuning EWA and reinforcement learning are applied to 12 different 2 x 2 games and their results are compared with the results from experimental data. We test whether the models are capable of replicating the aggregate distribution of behavior, as well as correctly predicting individuals' round-by-round behavior. Our results are two-fold: while the simulations with impulse-matching and action-sampling learning successfully replicate the experimental data on the aggregate level, individual behavior is best described by self-tuning EWA. Nevertheless, impulse-matching learning has the second highest score for the individual data. In addition, only self-tuning EWA and impulse-matching learning lead to better round-by-round predictions than the aggregate frequencies, which means they adjust their predictions correctly over time.
    Keywords: learning, 2 x 2 games, Experimental data
    JEL: C92 C72 C91
    Date: 2011–10
  12. By: Wieland Mueller; Fangfang Tan
    Abstract: Previous experimental results on one-shot sequential two-player games show that group decisions are closer to the subgame-perfect Nash equilbirum than individual decisions. We extend the analysis of inter-group versus inter-individual decision making to a Stackelberg market game, by running both one-shot and repeated markets. Whereas in the one-shot markets we find no significant differences in the behavior of groups and individuals, we find that the behavior of groups is further away from the subgame-perfect equilibrium of the stage game than that of individuals. To a large extent, this result is independent of the method of eliciting choices (sequential or strategy method) and the method used to account for observed first- and second-mover behavior. We provide evidence on followers' response functions and electronic chats to offer an explanation for the differential effect that the time horizon of interaction has on the extent of individual and group players (non)conformity with subgame perfectness.
    Keywords: Stackelberg market, groups versus individuals, discontinuity effect, experiment
    JEL: C72 C92 L13
    Date: 2011–10
  13. By: Dargnies, Marie-Pierre
    Abstract: Recent experimental results indicate that women do not like competitive environments as much as men do. Another literature is interested in the effect of social identity on economic behaviors. This paper investigates in the lab the impact of social identity on men and women's willingness to compete both individually and as part of a team. To this aim, participants from the Identity sessions had to go through group identity building activities in the lab while participants from the Benchmark sessions did not. The main result is that men are only willing to enter a team competition with a teammate of unknown ability if they share a common group identity with him or her. This change of behavior seems to be caused by high-performing men who are less reluctant to be matched with a possibly less able participant when he or she belongs to his group. On the other hand, group identity does not seem to induce women to take actions more in the interest of the group they belong to. --
    Keywords: Social Identity,Gender Effects,Tournament,Teams
    Date: 2011
  14. By: Gilles Le Garrec (Observatoire Français des Conjonctures Économiques); (Observatoire Français des Conjonctures Économiques)
    Abstract: Departing from mainstream economics, surveys ?rst show that individ- uals do care about fairness in their demand for redistribution. They also show that the cultural environment in which individuals grow up a¤ects their preferences about redistribution. Including these two components of the demand for redistribution, we propose in this article a mechanism of cultural transmission of the taste for fairness. Consistently with the process of socialization, the young preferences depend on collective choices through observation and imitation. Observation during childhood of redistributive policies far from what is perceived as fair results then in a lower taste for fairness. As a consequence, the model exhibits a multiplicity of history- dependent steady states which may account for the huge di¤erence of redis- tribution observed between Europe and the United States.
    Keywords: redistribution, voting behavior, fairness, endogenous preferences
    JEL: H53 D72 D64
    Date: 2011–12
  15. By: Kai A. Konrad; Florian Morath
    Abstract: This paper analyzes the role of narrowly selfish and other-regarding preferences for the median voter in a Meitzer-Richard (1981) framework. We use computerized and real human co-players to distinguish between these sets of motivations. Redistribution to real co-players has a negative effect on the median voter's tax rate choice. Further, perceived income mobility decreases the desired amount of redistribution. Our results suggest the importance of concerns about own mobility as well as status concerns of the median voter who tends to keep distance to the low-income group, whereas inequity aversion does not play a role in the political economy context.
    Keywords: redistribution, other-regarding preferences, median voter, experiments
    JEL: C91 D03 D72 D78 H20
    Date: 2011–07
  16. By: Strulik, Holger
    Abstract: This paper proposes a theory for the social evolution of obesity. It considers a society, in which individuals experience utility from consumption of food and non-food, the state of their health, and the evaluation of their appearance by others. The theory explains why, ceteris paribus, poor persons are more prone to be severely overweight although eating is expensive and how obesity occurs as a social phenomenon such that body mass continues to rise long after the initial cause (e.g. a lower price of food) is gone. The paper investigates the determinants of a steady-state at which the median citizen is overweight and how an originally lean society arrives at such a steady-state. Extensions of the theory towards dietary choice and the possibility to exercise in order to loose weight demonstrate robustness of the basic mechanism and provide further interesting results.
    Keywords: Obesity Epidemic, Social Dynamics, Social Multiplier, Income Gradient, Feeling Fat, Feeling Unhealthy, Fat Tax
    JEL: D11 I14 Z13
    Date: 2012–01
  17. By: Dutta, Nabamita; Mukherjee, Deepraj
    Abstract: The paper investigates the missing link in the literature – whether informal institutions, or what is known as culture, can affect the level of financial development for a country? Our hypothesis stresses that the cultural dimensions of a country can have an impact on its financial set up. We consider multiple dimensions of culture, identified in the literature by Tabellini, to test our hypothesis. As culture evolve in the form of greater trust, control and other traits, individuals’ attitudes towards financial market change, and they engage in greater financial transactions. This, in turn, leads to better financial development. Using quantile estimation technique for a cross-section of 90 countries we find that culture significantly influences the level of financial development. To ensure the robustness of our findings we use Hofstede’s cultural dimension-‘uncertainty avoidance index’ as an alternative measure for culture. Our results hold for multiple measures of financial development.
    Keywords: Informal Institutions; Financial Development; Culture; Social capital
    JEL: G1 Z1 O17
    Date: 2011–05–13

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