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on Evolutionary Economics |
| By: | Michał Krawczyk (University of Warsaw, Faculty of Economic Sciences); Fabrice Le Lec (Catholic University of Lille, Lille Economie & Management UMR CNRS 8179) |
| Abstract: | We propose an experimental method whose purpose is to induce selfish behavior in games for a broad class of social preferences. It provides a theoretical framework for testing game theoretical predictions by confronting subjects with a commonly known payoff matrix actually representing their preferences. The paper describes the empirical tests of this method based on the comparison of results from several popular experimental games played with and without our methodology. Apart from it being a test of validity of the method, our experiment helps answer the question of how useful social preferences could be in explaining commonly observed deviations from selfish rationality. Results suggest that our method does induce more selfish behaviors: a substantial part of the difference between predictions based on selfishness and observed behaviors seems indeed driven by such preferences. But they also indicate that a considerable share is left untouched, perhaps giving weight to alternative explanations. |
| Keywords: | social preference, experimental game theory, ultimatum game, public goods game, trust game, prisoner's dilemma, dictator game |
| JEL: | A13 C65 C72 D63 D03 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2012-06&r=evo |
| By: | Timothy N. Cason (Department of Economics, Krannert School of Management, Purdue University); Anya C. Savikhin (Becker Friedman Institute for Economic Research, The University of Chicago); Roman Sheremeta (Argyros School of Business and Economics, Chapman University) |
| Abstract: | Motivated by problems of coordination failure observed in weak-link games, we experimentally investigate behavioral spillovers for minimum- and median-effort coordination games. Subjects play these coordination games simultaneously and sequentially. The results show that successful coordination on the Pareto optimal equilibrium in the median game influences behavior in the minimum game when the games are played sequentially. Moreover, this positive, Pareto-improving spillover is present even when group composition changes across games, although the effect is not as strong. We also find that the precedent for uncooperative behavior in the minimum game does not influence play in the median game. These findings suggest guidelines for increasing cooperative behavior within organizations. |
| Keywords: | coordination, order-statistic games, experiments, cooperation, minimum game, median game, behavioral spillover |
| JEL: | C72 C91 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:11-20&r=evo |
| By: | Roman M. Sheremeta (Argyros School of Business and Economics, Chapman University); Timothy Shields (Argyros School of Business and Economics, Chapman University) |
| Abstract: | We examine subjects' behavior in sender-receiver games where there are gains from trade and alignment of interests in one of the two states. We elicit subjects' beliefs, risk and other-regarding preferences. Our design also allows us to examine the behavior of subjects in both roles, to determine whether the behavior in one role is the best response to the subject's own behavior in the other role. The results of the experiment indicate that 60 percent of senders adopt deceptive strategies by sending favorable message when the true state of the nature is unfavorable. Nevertheless, 67 percent of receivers invest conditional upon a favorable message. The investing behavior of receivers cannot be explained by risk preferences or as a best response to subject's own behavior in the sender's role. However, it can be rationalized by accounting for elicited beliefs and other-regarding preferences. Finally, the honest behavior of some senders can be explained by other-regarding preferences. Thus we find liars do believe, and individuals who care about the payoffs of others tend to be honest. |
| Keywords: | experiment, strategic communication, beliefs, lying, deception, other-regarding preferences |
| JEL: | C72 C91 D82 D83 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:12-05&r=evo |
| By: | Cheung, Stephen L. |
| Abstract: | Understanding the forces that enhance or erode cooperation in social dilemmas is a fundamental question in social science. Previous experiments have shown that selfish bias is an important source of fragility in conditional cooperation, and that the possibility of punishment can strengthen cooperation, however potential efficiency gains are threatened by antisocial punishment of higher contributors. This paper introduces new experimental designs to examine how these behaviours respond to the full range of variation in the contributions of others. It is shown that selfish bias becomes significantly worse as others contribute more unequally, while punishment increases both with decreasing contributions by the target player and increasing contributions by a third player. Antisocial punishment is seldom directed specifically toward high contributors; rather, it may be motivated by pre-emptive retaliation. |
| Keywords: | strategy method; punishment; conditional cooperation; selfish bias |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:syd:wpaper:2123/8089&r=evo |
| By: | Salomon Israel; Ori Weisel; Richard P. Ebstein; Gary Bornstein |
| Abstract: | In today’s increasingly interconnected world, deciding with whom and at what level to cooperate becomes a matter of increasing importance as societies become more globalized and large-scale cooperation becomes a viable means of addressing global issues. This tension can play out via competition between local (e.g. within a group) and global (e.g., between groups) interests. Despite research highlighting factors influencing cooperation in such multi-layered situations, their biological basis is not well understood. In a double-blind placebo controlled study, we investigated the influence of intranasally administered oxytocin and arginine vasopressin on cooperative behavior at local and global levels. We find that oxytocin causes an increase in both the willingness to cooperate and the expectation that others will cooperate at both levels. In contrast, participants receiving vasopressin did not differ from those receiving placebo in their cooperative behavior. Our results highlight the selective role of oxytocin in intergroup cooperative behavior. |
| Keywords: | altruism, oxytocin, vasopressin, intergroup cooperation, nested social dilemma |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:huj:dispap:dp598&r=evo |
| By: | Shakun D. Mago (Department of Economics, Robins School of Business, University of Richmond); Roman M. Sheremeta (Argyros School of Business and Economics, Chapman University) |
| Abstract: | This study examines behavior of subjects in simultaneous and sequential multi-battle contests. In simultaneous contests, subjects make positive bids in each battle 80% of the time and bids fall within the predicted boundaries. However, 35% of the time subjects make positive bids in only two, instead of all three, battles and they significantly overuse moderately high bids. In sequential contests, theory predicts sizable bids in the first battle and no bids in the subsequent battles. Contrary to this prediction, subjects significantly underbid in the first battle and overbid in subsequent battles. Consequently, instead of always ending in the second battle, contest proceeds to the third battle 38% of the time. Finally, in both simultaneous and sequential settings, subjects make higher aggregate bids than predicted resulting in negative expected payoffs. |
| Keywords: | multi-battle contest, experiments, risk aversion, overdissipation |
| JEL: | C72 C91 D72 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:12-06&r=evo |
| By: | Omar Al-Ubaydli; John A. List |
| Abstract: | Economists are increasingly turning to the experimental method as a means to estimate causal effects. By using randomization to identify key treatment effects, theories previously viewed as untestable are now scrutinized, efficacy of public policies are now more easily verified, and stakeholders can swiftly add empirical evidence to aid their decision-making. This study provides an overview of experimental methods in economics, with a special focus on developing an economic theory of generalizability. Given that field experiments are in their infancy, our secondary focus pertains to a discussion of the various parameters that they identify, and how they add to scientific knowledge. We conclude that until we conduct more field experiments that build a bridge between the lab and the naturally-occurring settings of interest we cannot begin to make strong conclusions empirically on the crucial question of generalizability from the lab to the field. |
| JEL: | C9 C91 C92 C93 D03 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17957&r=evo |
| By: | Curtis R. Price (Department of Economics & Marketing, College of Business, University of Southern Indiana); Roman M. Sheremeta (Argyros School of Business and Economics, Chapman University) |
| Abstract: | In modern firms the use of contests as an incentive device is ubiquitous. Nonetheless, recent experimental research shows that in the laboratory subjects routinely make suboptimal decisions in contests even to the extent of making negative returns. The purpose of this study is to investigate if changing how agents are endowed with resources can increase the efficiency in contests. To this end, we conduct a laboratory experiment in which subjects are asked to allot costly resources (bids) in an effort to attain an award (prize). In line with other laboratory studies of contests, our results show that subjects overbid relative to theoretical predictions and incur substantial losses as a result. Making subjects earn their initial resource endowments mitigates the amount of overbidding and thus increases overall efficiency. Overbidding is also linked to gender with women bidding higher than men and having lower average earnings. Other demographic information such as religiosity and individual preferences towards winning and risk also contribute to excessive bidding. |
| Keywords: | contest, experiments, overbidding, endowment, gender, religiosity |
| JEL: | C72 C91 D61 D72 J16 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:12-07&r=evo |
| By: | Uzi Segal (Boston College) |
| Abstract: | Preferences may arise from regret, i.e., from comparisons with alternatives forgone by the decision maker. We show that when the choice set consists of pairwise statistically independent lotteries, transitive regret-based behavior is consistent with betweenness preferences and with a family of preferences that is characterized by a consistency property. Examples of consistent preferences include CARA, CRRA, and anticipated utility. |
| Keywords: | Regret, transitivity, non-expected utility |
| Date: | 2012–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:boc:bocoec:796&r=evo |
| By: | Alberto, Chilosi |
| Abstract: | After the demise of “real” socialism and the decline of “western” socialism, socialism can be salvaged as a social preference system oriented towards equality and social justice, to be implemented without systemic constraints in the organizational and institutional sense. At the same time there is a case for maintaining an institutional framework allowing different forms of economic organization,capitalist and non-capitalist,to compete on equal footing, in an evolutionary perspective, thus allowing the second to develop if proven efficient. Another way for a spontaneous extension of the domain of socialism could derive from the socialization of consumption, if the consumption of public goods continues to make up a growing component of real consumption. |
| Keywords: | Socialism; Capitalism; Socialization of Consumption |
| JEL: | P50 |
| Date: | 2012–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:37828&r=evo |
| By: | Kenneth Kasa (Simon Fraser University); |
| Abstract: | This paper studies decision making by agents who value optimism, but are unsure of their environment. As in Brunnermeier and Parker (2005), an agent’s optimism is assumed to be tempered by the decision costs it imposes. As in Hansen and Sargent (2008), an agent’s uncertainty about his environment leads him to formulate ‘robust’ decision rules. It is shown that when combined, these two considerations can lead agents to adhere to the Rational Expectations Hypothesis. Rather than being the outcome of the sophisticated statistical calculations of an impassive expected utility maximizer, Rational Expectations can instead be viewed as a useful approximation in environments where agents struggle to strike a balance between doubt and hope. |
| Keywords: | Rational expectations; robustness |
| JEL: | D81 D84 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:sfu:sfudps:dp12-05&r=evo |
| By: | Joachim Kaldasch |
| Abstract: | The aim of this work is to establish the personal income distribution from the elementary constituents of a free market; products of a representative good and agents forming the economic network. The economy is treated as a self-organized system. Based on the idea that the dynamics of an economy is governed by slow modes, the model suggests that for short time intervals a fixed ratio of total labour income (capital income) to net income exists (Cobb-Douglas relation). Explicitly derived is Gibrat's law from an evolutionary market dynamics of short term fluctuations. The total private income distribution is shown to consist of four main parts. From capital income of private firms the income distribution contains a lognormal distribution for small and a Pareto tail for large incomes. Labour income contributes an exponential distribution. Also included is the income from a social insurance system, approximated by a Gaussian peak. The evolutionary model is able to reproduce the stylized facts of the income distribution, shown by a comparison with empirical data of a high resolution income distribution. The theory suggests that in a free market competition between products is ultimately the origin of the uneven income distribution. |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1203.6507&r=evo |