nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2012‒03‒28
twelve papers chosen by
Matthew Baker
City University of New York

  1. Retaliation and the role for punishment in the evolution of cooperation By Irenaeus Wolff
  2. Motives for Sharing in Social Networks By Ligon, Ethan; Schechter, Laura
  3. An Unlucky Feeling: Persistent Overestimation of Absolute Performance with Noisy Feedback By Grossman, Zachary; Owens, David
  4. Homo Moralis-Preference evolution under incomplete information and assortative matching By Alger, Ingela; Weibull, Jörgen
  5. Performance of a reciprocity model in predicting a positive reciprocity decision By Bhirombhakdi, Kornpob
  6. Male Pragmatism in Ethical Decision Making By Kray, Laura J.; Haselhuhn, Michael P.
  7. Crossing the Point of No Return: A Public Goods Experiment By Urs Fischbacher; Sabrina Teyssier; Simeon Schudy
  8. Seeds of Distrust: Conflict in Uganda By Rohner, Dominic; Thoenig, Mathias; Zilibotti, Fabrizio
  9. Social Reactions to Overconfidence: Do the Costs of Overconfidence Outweigh the Benefits? By Kennedy, Jessica A.; Anderson, Cameron; Moore, Don A.
  10. The Strategic Formation of Networks: Experimental Evidence By Carrillo, Juan D; Gaduh, Arya
  11. Risk Pooling, Risk Preferences, and Social Networks. By Garance Genicot, Orazio Attanasio, Abigail Barr, Juan Camilo Cardenas and Costas Meghir
  12. Life Expectancy, Labor Supply, and Long-Run Growth: Reconciling Theory and Evidence By Strulik, Holger; Werner, Katharina

  1. By: Irenaeus Wolff
    Abstract: Models of evolutionary game theory have shown that punishment may be an adaptive behaviour in environments characterised by a social-dilemma situation. Experimental evidence closely corresponds to this finding but questions the cooperation-enhancing effect of punishment if players are allowed to retaliate against their punishers. This study provides a theoretical explanation for the existence of retaliating behaviour in the context of repeated social dilemmas and analyses the role punishment can play in the evolution of cooperation under these conditions. We show a punishing strategy can pave the way for a partially-cooperative equilibrium of conditional cooperators and de- fecting types and, under positive mutation rates, foster the cooperation level in this equilibrium by prompting reluctant cooperators to cooperate. How- ever, when rare mutations occur, it cannot sustain cooperation by itself as punishment costs favour the spread of non-punishing cooperators.
    Keywords: Public goods, Prisoner's Dilemma, Strong reciprocity, Counter-punishment
    Date: 2012
  2. By: Ligon, Ethan; Schechter, Laura
    Abstract: What motivates people in rural villages to share? We first elicit a baseline level of sharing using a standard, anonymous dictator game. Then using variants of the dictator game that allow for either revealing the dictator's identity or allowing the dictator to choose the recipient, we attribute variationin sharing to three different motives. The first of these, directed altruism, is related to preferences, while the remaining two are incentive-related(sanctions and reciprocity). We observe high average levels of sharing in ourbaseline treatment, while variation across individuals depends importantlyon the incentive-related motives. Finally, variation in measured reciprocity within the experiment predicts observed 'real-world' gift-giving, while other motives measured in the experiment do not predict behavior outside the experiment.
    Keywords: Social Sciences, General, Economics
    Date: 2011–12–01
  3. By: Grossman, Zachary; Owens, David
    Abstract: How does overconfidence arise and persist in the face of experience and feedback? We examine experimentally how individuals' beliefs about their absolute, as opposed to relative, performance on a quiz react to noisy, but unbiased, feedback. Participants believe themselves to have received `unlucky' feedback and they overestimate their own scores, but they exhibit no overconfidence in non-ego-relevant beliefs---in this case, about others' scores. Unlike previous studies of relative performance estimates, we find this to be driven by overconfident priors, as opposed to biased updating, which suggests that social comparisons contribute to biased information processing. While feedback improves performance estimates, this learning does not translate into improved estimates of subsequent performances. This suggests that people use performance feedback to update their beliefs about their ability differently than they do to update their beliefs about their performance, contributing to the persistence of overconfidence.
    Keywords: overconfidence, feedback, overestimation, absolute performance, Bayesian updating, biased updating, information processing, learning transfer, cross-game learning, quadratic scoring rule, behavioral economics, experimental economics, Behavioral Economics
    Date: 2011–04–11
  4. By: Alger, Ingela; Weibull, Jörgen
    Abstract: What preferences will prevail in a society of rational individuals when preference evolution is driven by their success in terms of resulting payoffs? We show that when individuals’ preferences are their private information, a convex combinations of selfishness and morality stand out as evolutionarily stable. We call individuals with such preferences homo moralis. At one end of the spectrum is homo oeconomicus, who acts so as to maximize his or her material payoff. At the opposite end is homo kantiensis, who does what would be “the right thing to do,” in terms of material payoffs, if all others would do likewise. We show that the stable degree of morality - the weight placed on the moral goal - equals the index of assortativity in the matching process. The motivation of homo moralis is arguably compatible with how people often reason, and the induced behavior agrees with pro-social behaviors observed in many laboratory experiments.
    JEL: C73 D03
    Date: 2012–02
  5. By: Bhirombhakdi, Kornpob
    Abstract: This economic experiment initiates in evaluating a model's performance in predicting a decision. The reciprocity model is measured its accuracy rate in prediction and informativeness as aspects of the model's performance. Seventy-nine undergraduate students voluntarily joined the experiment. They made decisions contingently in designed situations as the first player in a dictator game and all roles in trust-share games. The study controls effects of choice set (equal split, competitive, and different social welfare choices) and framing effect. The result shows that the model has high performance in both prediction and informative. Furthermore, it shows an existence of the loss aversion behavior, and a significant relationship between decisions in the dictator game and the trustshare games. The study suggests that the more complicated model may not be marginally useful in predicting decision in the positive reciprocity situations.
    Keywords: economic experiment; performance; reciprocity; trust-share game
    JEL: B40 C71 C91
    Date: 2011–12–23
  6. By: Kray, Laura J.; Haselhuhn, Michael P.
    Abstract: Why do men have more lenient ethical standards than women? To address this question, we test the male pragmatism hypothesis, which posits that men rely on their social and achievement motivations to set ethical standards more so than women. Across two studies, motivation was both manipulated and measured before examining ethicality judgments. Study 1 manipulated identification with two parties in an ethical dilemma and found that men were more egocentric than women. Whereas men’s ethicality judgments were affected by the identification manipulation, women’s judgments were not. Study 2 examined whether implicit negotiation beliefs, which predict achievement motivations to either demonstrate or develop negotiating skill, predicted ethicality judgments and, if so, whether this relationship was moderated by gender. As hypothesized, fixed beliefs predicted lower ethical standards, particularly for men. In combination, these findings suggest men are more pragmatic in setting ethical standards than women.
    Keywords: Gender, ethical judgment, egocentrism, self-interest, negotiation, motivated reasoning, Organizational Behavior and Theory
    Date: 2011–03–30
  7. By: Urs Fischbacher; Sabrina Teyssier; Simeon Schudy
    Abstract: In many cases individuals benefit differently from the provision of a public good. We study in a laboratory experiment how heterogeneity in returns and uncertainty affects unconditional and conditional contribution behavior in a linear public goods game. The elicitation of conditional contributions in combination with a within subject design allows us to investigate belief-independent and type-specific reactions to heterogeneity. We find that, on average, heterogeneity in returns decreases unconditional contributions but does not affects conditional contributions only weakly. Uncertainty in addition to heterogeneity reduces conditional contributions slightly. Individual reactions to heterogeneity differ systematically. Selfish subjects and one third of conditional cooperators do not react to heterogeneity whereas the reactions of the remaining conditional cooperators vary. A substantial part of heterogeneity in reactions can be explained by inequity aversion which accounts for different reference groups subjects compare to.
    Keywords: public goods, social preferences, conditional cooperation, heterogeneity
    Date: 2012
  8. By: Rohner, Dominic; Thoenig, Mathias; Zilibotti, Fabrizio
    Abstract: We study the effect of civil conflict on social capital, focusing on the experience of Uganda during the last decade. Using individual and county-level data, we document large causal effects on trust and ethnic identity of an exogenous outburst of ethnic conflicts in 2002-05. We exploit two waves of survey data from Afrobarometer 2000 and 2008, including information on socioeconomic characteristics at the individual level, and geo-referenced measures of fighting events from ACLED. Our identification strategy exploits variations in the intensity of fighting both in the spatial and cross-ethnic dimensions. We find that more intense fighting decreases generalized trust and increases ethnic identity. The effects are quantitatively large and robust to a number of control variables, alternative measures of violence, and different statistical techniques involving ethnic and spatial fixed effects and instrumental variables. We also document that the post-war effects of ethnic violence depend on the ethnic fractionalization. Fighting has a negative effect on the economic situation in highly fractionalized counties, but has no effect in less fractionalized counties. Our findings are consistent with the existence of a self-reinforcing process between conflicts and ethnic cleavages.
    Keywords: ethnic conflict; ethnic identity; fighting; fractionalisation; slavery; social capital; trust; Uganda
    JEL: A13 D74 O55
    Date: 2012–01
  9. By: Kennedy, Jessica A.; Anderson, Cameron; Moore, Don A.
    Abstract: Scholars have recently proposed that overconfidence pervades self-judgment because of the social benefits it provides individuals, such as higher status in groups (Anderson, Brion, & Moore, 2010). A counter-argument to this social-functional account of overconfidence is that the possible social costs of overconfidence could outweigh its benefits. Specifically, individuals could be severely punished by groups if their overconfidence were to become apparent to others. This paper examines social reactions to overconfidence by exploring whether groups in fact punish individuals revealed to be overconfident. In three laboratory studies, we found that groups did not react negatively to individuals revealed to be overconfident and in fact tended to view overconfident individuals as more socially skilled. This research lends further empirical support to the social-functional account of overconfidence by suggesting that the status-related benefits of overconfidence outweigh the possible social costs.
    Keywords: status, overconfidence, self-enhancement, hierarchy, accountability, Organizational Behavior and Theory, Social Psychology
    Date: 2011–03–30
  10. By: Carrillo, Juan D; Gaduh, Arya
    Abstract: We use a laboratory experiment to explore dynamic network formation in a six-player game where link creation requires mutual consent. The analysis of network outcomes suggests that the process tends to converge to the pairwise-stable (PWS) equilibrium when it exists and not to converge at all when it does not. When multiple PWS equilibria exist, subjects tend to coordinate on the high-payoff one. The analysis at the single choice level indicates that the percentage of myopically rational behavior is generally high. Deviations are more prevalent when actions are reversible, when marginal payoff losses are smaller and when deviations involve excessive links that can be removed unilaterally later on. There is, however, some heterogeneity across subjects.
    Keywords: Laboratory experiments; Myopic rationality; Pairwise stable equilibria; Social networks
    JEL: C73 C92 D85
    Date: 2012–01
  11. By: Garance Genicot, Orazio Attanasio, Abigail Barr, Juan Camilo Cardenas and Costas Meghir (Department of Economics, Georgetown University)
    Abstract: Using data from an experiment conducted in 70 Colombian communities, we investigate who pools risk with whom when trust is crucial to enforce risk pooling arrangements. We explore the roles played by risk attitudes and social networks. Both theoretically and empirically, we nd that close friends and relatives group assortatively on risk attitudes and are more likely to join the same risk pooling group, while unfamiliar participants group less and rarely assort. These ndings indicate that where there are advantages to grouping assortatively on risk attitudes those advantages may be inaccessible when trust is absent or low.
    Keywords: Field experiment; risk sharing; social sanctions; insurance; group formation; matching.
    Date: 2011–01–05
  12. By: Strulik, Holger; Werner, Katharina
    Abstract: We set up a three-period overlapping generation model in which young individuals allocate their time to schooling and work, healthy middle aged individuals allocate their time to leisure and work and their income to consumption and savings for retirement, and old age individuals live off their savings. The three period setup allows us to distinguish between longevity and active life expectancy (i.e. the expected length of period 1 and 2). We show that individuals optimally respond to a longer active life by educating more and, if the labor supply elasticity is high enough, by supplying less labor. We calibrate the model to US data and show that the historical evolution of increasing education and declining labor supply can be explained as an optimal response to increasing active life expectancy. We integrate the theory into a unified growth model and reestablish increasing life expectancy as an engine of long-run economic development.
    Keywords: longevity, active life expectancy, education, hours worked, economic growth
    JEL: E20 I25 J22 O10 O40
    Date: 2012–03

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