nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2012‒06‒25
twenty-one papers chosen by
Matthew Baker
City University of New York

  1. Evolution towards efficient coordination in repeated games, preliminary version By Demichelis, Stefano
  2. Moral Hypocrisy, Power and Social Preferences By Rustichini, Aldo; Villeval, Marie Claire
  3. Neighborhood Effects on Social Behavior: The Case of Irrigated and Rainfed Farmers in Bohol, the Philippines By Tsusaka, Takuji W.; Kajisa, Kei; Pede, Valerien O.; Aoyagi, Keitaro
  4. Norm enforcement in the city: A natural field experiment By Loukas Balafoutas; Nikos Nikiforakis
  5. Economic Cosmology and the Evolutionary Challenge By John M. Gowdy; Denise E. Dollimore; David Sloan Wilson; Ulrich Witt
  6. Three steps ahead By Heller, Yuval
  7. Facing Your Opponents: Social identification and information feedback in contests. By Shakun D. Mago; Anya C. Savikhin; Roman M. Sheremeta
  8. Inequality and Inter-group Conflicts – Experimental Evidence By Klaus Abbink; David Masclet; Daniel Mirza
  9. Identity, Homophily and In-Group Bias By Sergio Currarini; Friederike Menge
  10. Facing a dilemma: cooperative behavior and beauty By Donja Darai; Silvia Grätz
  11. From Worship to Worldly Pleasures: Secularization and Long-Run Economic Growth By Holger Strulik
  12. Studying deception without deceiving participants: An experiment of deception experiments By Federica Alberti; Werner Güth
  13. The Modular Nature of Trustworthiness Detection By Bonnefon, Jean-François; De Neys, Wim; Hopfensitz, Astrid
  14. Discrimination and the Evolution of Cooperation in the Snowdrift Heterogeneous Game with Incomplete Information By André Barreira da Silva Rocha; Annick Laruelle
  15. Essays on (small) crime: Perception, social norms, happiness, and prevention. By Douhou, S.
  16. Rules or consequences? The role of ethical mindsets in moral dynamics By Michael Bashshur; Gert Cornelissen; Marc Le Menestrel; Julian Rode
  17. Social Norms, Higher-Order Beliefs and the Emperor's New Clothes By Zaki Wahhaj
  18. The Evolution of Ideology, Fairness and Redistribution By Alberto Alesina; Guido Cozzi; Noemi Mantovan
  19. Happiness, Habits and High Rank: Comparisons in Economic and Social Life By Andrew E. Clark
  20. Economic Coordination and Dynamics: Some Elements of an Alternative "Evolutionary" Paradigm By Giovanni Dosi
  21. Competition, Cooperation, and Collective Choice By Markussen, Thomas; Reuben, Ernesto; Tyran, Jean-Robert

  1. By: Demichelis, Stefano
    Abstract: We show that in long repeated games- or in infinitely repeated games with discount rate close to one- payoffs corresponding to evolutionary stable sets are asymptotically efficient, as intuition suggests. Actions played at the beginning of the game are used as messages that allow players to coordinate on Pareto optimal outcomes in the following stages. Strategies following some simple and intuitive "behavioral maxims" are shown to be able to drive out inefficient ones from a population. The result builds a bridge between the theory of repeated games and that of communication games that will be further investigated.
    Keywords: Repeated Games; Evolution; Communication; Efficiency
    JEL: C7
    Date: 2012–06–07
  2. By: Rustichini, Aldo (University of Minnesota); Villeval, Marie Claire (CNRS, GATE)
    Abstract: We show with a laboratory experiment that individuals adjust their moral principles to the situation and to their actions, just as much as they adjust their actions to their principles. We first elicit the individuals’ principles regarding the fairness and unfairness of allocations in three different scenarios (a Dictator game, an Ultimatum game, and a Trust game). One week later, the same individuals are invited to play those same games with monetary compensation. Finally in the same session we elicit again their principles regarding the fairness and unfairness of allocations in the same three scenarios. Our results show that individuals adjust abstract norms to fit the game, their role and the choices they made. First, norms that appear abstract and universal take into account the bargaining power of the two sides. The strong side bends the norm in its favor and the weak side agrees: Stated fairness is a compromise with power. Second, in most situations, individuals adjust the range of fair shares after playing the game for real money compared with their initial statement. Third, the discrepancy between hypothetical and real behavior is larger in games where real choices have no strategic consequence (Dictator game and second mover in Trust game) than in those where they do (Ultimatum game). Finally the adjustment of principles to actions is mainly the fact of individuals who behave more selfishly and who have a stronger bargaining power. The moral hypocrisy displayed (measured by the discrepancy between statements and actions chosen followed by an adjustment of principles to actions) appears produced by the attempt, not necessarily conscious, to strike a balance between self-image and immediate convenience.
    Keywords: moral hypocrisy, fairness, social preferences, power, self-deception, self-image
    JEL: D03 D63 C91 C7
    Date: 2012–05
  3. By: Tsusaka, Takuji W.; Kajisa, Kei; Pede, Valerien O.; Aoyagi, Keitaro
    Keywords: behavioral games, field experiments, spatial econometrics, dictator game, public goods game, irrigation., Institutional and Behavioral Economics, C59, D01, Q25,
    Date: 2012
  4. By: Loukas Balafoutas; Nikos Nikiforakis
    Abstract: Extensive evidence from laboratory experiments indicates that many individuals are willing to use costly punishment to enforce social norms, even in one-shot interactions. However, there appears to be little evidence in the literature of such behavior in the field. We study the propensity to punish norm violators in a natural field experiment conducted in the main subway station in Athens, Greece. The large number of passengers ensures that strategic motives for punishing are minimized. We study violations of two distinct efficiency enhancing social norms. In line with laboratory evidence, we find that individuals punish norm violators. Men are more likely than women to punish violators, while the decision to punish is unaffected by the violator’s height and gender. Interestingly, we find that violations of the better known of the two norms are substantially less likely to trigger punishment. We present additional evidence from two surveys providing insights into the determinants of norm enforcement.
    Keywords: norm enforcement, social norms, field experiment, altruistic punishment, cooperation
    JEL: C93 D63 H41
    Date: 2012–06
  5. By: John M. Gowdy; Denise E. Dollimore; David Sloan Wilson; Ulrich Witt
    Abstract: The intellectual histories of economics and evolutionary biology are closely intertwined because both subjects deal with living, complex, evolving systems. Because the subject matter is similar, contemporary evolutionary thought has much to offer to economics. In recent decades theoretical biology has progressed faster than economics in understanding phenomena like hierarchical processes, cooperative behavior, and selection processes in evolutionary change. This paper discusses three very old "cosmologies" in Western thought, how these play out in economic theory, and how evolutionary biology can help evaluate their validity and policy relevance. These cosmologies, as manifested in economic theory are, (1) rational economic man, (2) the invisible hand of the market, and (3) the existence of a general competitive equilibrium. It is argued below that current breakthroughs in evolutionary biology and neuroscience can help economics go beyond these simple cosmologies.
    Date: 2012–06–12
  6. By: Heller, Yuval
    Abstract: Experimental evidence suggest that people only use 1-3 iterations of strategic reasoning, and that some people systematically use less iterations than others. In this paper, we present a novel evolutionary foundation for these stylized facts. In our model, agents interact in finitely repeated Prisoner's Dilemma, and each agent is characterized by the number of steps he thinks ahead. When two agents interact, each of them has an independent probability to observe the opponent's type. We show that if this probability is not too close to 0 or 1, then the evolutionary process admits a unique stable outcome, in which the population includes a mixture of “naive” agents who think 1 step ahead, and “sophisticated” agents who think 2-3 steps ahead.
    Keywords: Indirect evolution; cognitive hierarchy; bounded forward-looking; Prisoner's Dilemma; Cooperation
    JEL: D03 C73
    Date: 2012–06–13
  7. By: Shakun D. Mago (Department of Economics, Robins School of Business, University of Richmond, USA); Anya C. Savikhin (Becker Friedman Institute for Economic Research, The University of Chicago, USA); Roman M. Sheremeta (Argyros School of Business and Economics, Chapman University, USA)
    Abstract: We experimentally investigate the effect of social identification and information feedback on individual behavior in contests. Identifying subjects through photo display decreases efforts. Providing information feedback about others’ effort does not affect the aggregate effort levels but it does change the dynamics of individual behavior. We develop a behavioral model based on relative payoff maximization, and use it to estimate the degree of pro-social/status-seeking behavior. We find that decrease in ‘social distance’ between group members through photo display promotes pro-social behavior. Information feedback reduces the within-group volatility in effort level and facilitates greater adherence to the ‘group norm.’ Finally, in contrast to standard theoretical predictions, we find significant over-expenditure of efforts in all treatments. This overdissipation can be explained by a combination of non-monetary utility of winning and relative payoff maximization.
    Keywords: contest, information, identification, over-dissipation, experiments
    JEL: C72 C91 D72 D74
    Date: 2012
  8. By: Klaus Abbink (Department of Economics, Monash University, Clayton, Australia); David Masclet (University of Rennes 1, CREM-CNRS, France); Daniel Mirza (Université François Rabelais de Tours, France)
    Abstract: In this paper, we study the determinants of inter-groups conflicts, focusing our attention on the role of inequality aversion. First, we experimentally investigate whether inequality is a driving force of inter-group conflicts. Second, we investigate the factors that make preferences for conflict translate into actions. Inter-group conflicts require both coordination and necessary financial material resources. Our experiment consists of a two-stage game. First, subjects play a proportional rent-seeking game to share a prize. In a second stage players can coordinate with the other members of their group to reduce (“burn”) the other group members’ payoff. Treatments differ in the degree of social inequality set between the two groups by attributing to some subjects (the advantaged group) a larger share of the price than other subjects (the disadvantaged group) for the same amount of effort. We observe frequent conflicts, where, as expected, disadvantaged groups “burn” more money than advantaged groups. Surprisingly, however the frequency of conflicts decreases with the degree of inequality. Our data allow us to identify resignation as the driving force behind this phenomenon.
    Keywords: Design of experiments, Experimental economics, Social Inequality, Conflicts
    JEL: D72 C91
    Date: 2012–03
  9. By: Sergio Currarini (Department of Economics, University of Bristol and Dipartimento di Economia, Universita' Ca' Foscari di Venezia); Friederike Menge (School of Economics, University of Nottingham, University Park Campus and Department of Economics (AE1), Maastricht University)
    Abstract: School of Economics, University of Nottingham, University Park Campus and Department of Economics (AE1), Maastricht University
    Keywords: In-Group Bias, Homophily, Endogenous Matching, Experiments, Game Theory
    JEL: D03 D01 C91 C92 C7
    Date: 2012–05
  10. By: Donja Darai; Silvia Grätz
    Abstract: Physical attractiveness is associated with goodness in the literature. In particular, people think of attractive ones as being more socially skillful, trustworthy, or likeable. This "beauty-is-good" stereotype can induce a beauty premium in various economic interactions. Cooperative behavior might be one more such attribute that is elicited by physical attractiveness. In this paper we analyze this potential relationship. We combine data from 211 episodes of a television game show, in which contestants play a face-to-face prisoner's dilemma game, with data from independent facial appearance ratings of these contestants. The main finding is that attractiveness is an important factor for cooperative behavior even in an environment of very high stakes, communication, and past behavior. Although there is no difference between facially attractive and unattractive contestants regarding the decision to cooperate, facing a facially attractive opponent increases cooperation significantly. Especially, in mixed-gender interactions males and females are more likely to cooperate with a facially attractive counterpart. The marginal beauty premium for a one standard deviation increase in facial attractiveness amounts to an increase of a contestant's expected earnings of £2 153. Moreover, the probability to obtain positive earnings increases by 5.9 percentage points for facially attractive contestants.
    Keywords: Beauty premium, stereotypes, cooperation, prisoner's dilemma
    JEL: C71 D83 Z13
    Date: 2012–06
  11. By: Holger Strulik (Georg-August-University Göttingen)
    Abstract: In medieval times, most people identified with religious values and aggregate income and productivity grew at glacier speed. In the 20th century, religion played a much lesser role in daily life and income and productivity grew at high and unprecedented rates. The present paper develops a simple economic theory of identity choice that explains both stylized facts as well as a period of secularization during which an increasing share of the population abandons religious identity for worldly pleasures and aggregate productivity takes off. An extension of the basic model investigates the Protestant reformation as an intermediate stage. Another extension introduces socially-dependent religious preferences, establishes the endogenous emergence of multiple, self-fullling equilibria, and demonstrates how a social multiplier amplifies the speed of transition.
    Keywords: religion; identity; economic growth; productivity; secularization; comparative development
    JEL: N30 O10 O40 Z12 Z13
    Date: 2012–06–11
  12. By: Federica Alberti (Max Planck Institute of Economics, Strategic Interaction Group, Jena); Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group, Jena)
    Abstract: Banning deception in economic experiments does not exclude experiments with participants in the role of experimenters who can gain by deceiving those in the role of participants. We compare treatments with and without possible deception by experimenter-participants to test whether deception aects behaviour of participant-participants in a dictator experiment and whether participants in the role of experimenters engage in deception. We nd no dierence in behaviour of participant-participants between the treatments whereas most participants in the role of experimenters engage in deception.
    Keywords: Experimental economic methods, Deception, Experiments
    JEL: A12 C90
    Date: 2012–06–05
  13. By: Bonnefon, Jean-François (Centre national de la recherche scientifique); De Neys, Wim (Centre national de la recherche scientifique); Hopfensitz, Astrid (TSE)
    Abstract: The capacity to trust wisely is a critical facilitator of success and prosperity, and it has been conjectured that people of higher intelligence were better able to detect signs of untrustworthiness from potential partners. In contrast, this article reports five Trust Game studies suggesting that reading trustworthiness on the faces of strangers is a modular process. Trustworthiness detection from faces is independent of general intelligence (Study 1) and effortless (Study 2). Pictures that include non-facial features such as hair and clothing impair trustworthiness detection (Study 3) by increasing reliance on conscious judgments (Study 4), but people largely prefer to make decisions from this sort of pictures (Study 5). In sum, trustworthiness detection in an economic interaction is a genuine and effortless ability, possessed in equal amount by people of all cognitive capacities, but whose impenetrability leads to inaccurate conscious judgments and inappropriate informational preferences.
    Date: 2012–05
  14. By: André Barreira da Silva Rocha; Annick Laruelle
    Abstract: We study evolution of cooperation in the snowdrift game assuming a heterogeneous population composed of two types of individuals. Each individual plays one of four possible strategies, two discriminating and two non-discriminating ones, where a discriminating strategy is one whose actions played vary according to the opponent type. When all available strategies are played, in contrast to the game played by a homogeneous population, asymptotic stability vanishes. The population evolves to a neutrally stable state and cooperation emerges with the same frequency as in the homogeneous game. Neutral stability persists if a discriminating strategy is not played by the population. If instead a non-discriminating strategy is not played, asymptotic stability can be achieved. One discriminating strategy survives, the other strategies become extinct and co-operation emerges at a different frequency when compared to the homogeneous game.
    Date: 2012–05
  15. By: Douhou, S. (Tilburg University)
    Abstract: The first chapter deals with keystroke dynamics, the study of human typing behavior, as a means to prevent crime. The remaining chapters focus on so-called small crimes (e.g., taking a bundle of printing paper from the office for private use, littering in a public place, or fare dodging). More specifically, the influence of offender and offense characteristics on small crime perception and how perception is related to reporting behavior (in case of witnessing a small crime) is analyzed in the third and fourth chapter. The last chapter investigates the happiness-crime relationship with a focus on trust and social norms.
    Date: 2012
  16. By: Michael Bashshur; Gert Cornelissen; Marc Le Menestrel; Julian Rode
    Abstract: Recent research on the dynamics of moral behavior has documented two contrasting phenomena - moral consistency and moral balancing. Moral balancing refers to the phenomenon whereby behaving (un)ethically decreases the likelihood of doing so again at a later time. Moral consistency describes the opposite pattern - engaging in (un)ethical behavior increases the likelihood of doing so later on. Three studies support the hypothesis that individuals' ethical mindset (i.e., outcome-based versus rule-based) moderates the impact of an initial (un)ethical act on the likelihood of behaving ethically in a subsequent occasion. More specifically, an outcome-based mindset facilitates moral balancing and a rule-based mindset facilitates moral consistency.
    Keywords: moral balancing, moral consistency, ethical mindsets, ethical behavior
    JEL: C91 D03
    Date: 2012–01
  17. By: Zaki Wahhaj
    Abstract: The use of social sanctions against behaviour which contradicts a set of informal rules is often an important element in the functioning of informal institutions in traditional societies. In the social sciences, sanctioning behaviour has often been explained in terms of the internalisation of norms that prescribe the sanctions (e.g. Parsons 1951) or the threat of new sanctions against those who do not follow sanctioning behaviour (e.g. Akerlof 1976). We propose an alternative mechanism for maintaining a credible threat of social sanctions, showing that even in a population where individuals have not internalised a set of social norms, do not believe that others have internalised them, do not believe that others believe that others have internalised these norms, etc., up to a finite nth order, collective participation in social sanctions against behaviour which contradict the norms is an equilibrium if such beliefs exist at higher orders. The equilibrium can persist even if beliefs change over time, as long as the norms are believed to have been internalised at some finite nth order. The framework shows how precisely beliefs must change for the equilibrium to unravel and social norms to evolve.
    Keywords: social norms; higher-order belief; social sanctions; community enforcement; dynamics of norms; institutional change
    JEL: D01 D02 D83 Z10
    Date: 2012–06
  18. By: Alberto Alesina (Harvard University); Guido Cozzi (Durham Business School); Noemi Mantovan (Bangor University)
    Abstract: Ideas about what is "fair" influence preferences for redistribution. We study the dynamic evolution of different economies in which redistributive policies, perception of fairness, inequality and growth are jointly determined. We show how including beliefs about fairness can keep two otherwise identical countries in di¤erent development paths for a very long time. We show how different initial conditions regarding how "fair" is the same level of inequality can lead to two permanently different steady states. We also explore how bequest taxation can be an efficient way of redistributing wealth to correct "unfair" past accumulation of inequality
    Keywords: Endogenous Growth, Basic and Applied R&D, Endogenous Technological Change, Common Law
    Date: 2012–04–20
  19. By: Andrew E. Clark
    Abstract: The role of money in producing sustained subjective well-being seems to be seriously compromised by social comparisons and habituation. But does that necessarily mean that we would be better off doing something else instead? This paper suggests that the phenomena of comparison and habituation are actually found in a considerable variety of economic and social activities, rendering conclusions regarding well-being policy less straightforward.
    Keywords: Comparison, habituation, income, unemployment, marriage, divorce, health, religion, policy
    JEL: D01 D31 H00 I31 J12 J28
    Date: 2012
  20. By: Giovanni Dosi
    Abstract: The paper, largely based on the introduction to Dosi (2012), elaborates on the main interpretative ingredients, methodology and challenges ahead of the evolutionary research program in economics. Telegraphically, such a perspective attempts to understand a wide set of economic phenomena - ranging from microeconomic behaviours to the features of industrial structures and dynamics, all the way to the properties of aggregate growth and development - as outcomes of far-from-equilibrium interactions among heterogeneous agents, characterized by endogenous preferences, most often "boundedly rational" but always capable of learning, adapting and innovating with respect to their understandings of the world in which they operate, the technologies they master, their organizational forms and their behavioural repertoires. And on methodological grounds, far from disdaining formal modelling and statistical analysis, the research program is, however, largely inductive, taking very seriously indeed empirical regularities at all levels of observation as discipline for the modelling assumptions. Together, the paper places such interpretative perspective against some fundamental questions addressed by the economic discipline in general and against the answers to such questions that contemporary theory has to offer. Such questions fundamentally concern first, the drivers of dynamics and, second, the conditions of coordination among interacting agents.
    Keywords: Economic Evolution, Coordination, Dynamics, Bounded Rationality, Agent-based Macro Models, Innovation
    Date: 2012–06–06
  21. By: Markussen, Thomas (University of Copenhagen); Reuben, Ernesto (Columbia University); Tyran, Jean-Robert (University of Copenhagen)
    Abstract: The ability of groups to implement efficiency-enhancing institutions is emerging as a central theme of research in economics. This paper explores voting on a scheme of intergroup competition, which facilitates cooperation in a social dilemma situation. Experimental results show that the competitive scheme fosters cooperation. Competition is popular, but the electoral outcome depends strongly on specific voting rules of institutional choice. If the majority decides, competition is almost always adopted. If likely losers from competition have veto power, it is often not, and substantial gains in efficiency are foregone.
    Keywords: tournament, competition, public goods, cooperation, voting
    JEL: D72 J33 H41
    Date: 2012–06

This nep-evo issue is ©2012 by Matthew Baker. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.