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on Evolutionary Economics |
| By: | Benito Arruñada; Marco Casari; Francesca Pancotto |
| Abstract: | Through an experiment, we investigate how the level of rationality relates to concerns for equality and efficiency. Subjects perform dictator games and a guessing game. More rational subjects are not more frequently of the selfregarding type. When performing a comparison within the same degree of rationality, self-regarding subjects show more strategic sophistication than other subjects. |
| Keywords: | steps of reasoning, other-regarding preferences |
| JEL: | C91 C92 D63 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1306&r=evo |
| By: | Duersch, Peter; Oechssler, Jörg; Schipper, Burkhard C. |
| Abstract: | We show that in symmetric two-player exact potential games, the simple decision rule "imitate-if-better" cannot be beaten by any strategy in a repeated game by more than the maximal payoff difference of the one-period game. Our results apply to many interesting games including examples like 2x2 games, Cournot duopoly, price competition, public goods games, common pool resource games, and minimum effort coordination games. |
| Keywords: | Imitate-the-best; learning; exact potential games; symmetric games; relative payoffs; zero-sum games |
| JEL: | D43 C73 C72 |
| Date: | 2012–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:awi:wpaper:0529&r=evo |
| By: | Jose Apesteguia; Miguel A. Ballester |
| Abstract: | We propose a rule of decision-making, the sequential procedure guided by routes, and show that three influential boundedly rational choice models can be equivalently understood as special cases of this rule. In addition, the sequential procedure guided by routes is instrumental in showing that the three models are intimately related. We show that choice with a status-quo bias is a refinement of rationalizability by game trees, which, in turn, is also a refinement of sequential rationalizability. Thus, we provide a sharp taxonomy of these choice models, and show that they all can be understood as choice by sequential procedures. |
| Keywords: | Individual rationality, Bounded rationality, Behavioral economics. |
| JEL: | D01 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1309&r=evo |
| By: | Antonio Nicita; Matteo Rizzolli |
| Abstract: | The standard model of optimal deterrence predicts that the probability of wrongful conviction of the innocent is, at the margin, as detrimental to deterrence as the wrongful acquittal of guilty individuals. We extend the model in several directions: using expected utility as well as nonexpected utility to consider the role of risk aversion, non-linear probability weighting and loss aversion. We also consider how relevant emotions such as guilt, shame and indignation play out. Several of these factors support the intuition that wrongful convictions of the innocent do have a larger detrimental impact on deterrence and thus the policy implications are reconciled with the widely shared maxim in dubio pro reo. We then draw some theoretical implications such as a novel justification for the different standards of proof in criminal vs civil law as well as other policy implications. |
| Keywords: | wrongful convictions, Type I errors, wrongful acquittals, Type II errors, evidence, optimal under-deterrence, behavioral economics, risk aversion, loss aversion, prospect theory, prelec function |
| JEL: | K14 K41 K42 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:637&r=evo |
| By: | Büchner Charlotte; Cörvers Frank; Traag Tanja; Velden Rolf van der (ROA rm) |
| Abstract: | This study analyzes four different transmission mechanisms, through which father’searnings affect son’s earnings: the educational attainment, cognitive skills, the culturalcapital of the family and the social capital in the neighborhood. Using a unique dataset that combines panel data from a birth cohort with earnings data from a largenationwide income survey and national tax files, our findings show that cognitive skillsand schooling of the son account for 50% of the father-son earnings elasticity. Educationby far accounts for the largest part, while cognitive skills mainly work indirectly througheducational attainment. Social capital of the neighborhood and cultural capital of theparents account for an additional 6% of the intergeneration income persistence. Fromthese two additional mechanisms, social capital appears to play a stronger role than thecultural capital of the parents. This means that 44% of the intergenerational persistenceis due to other unobserved characteristics for example personality traits or spillovereffects of family assets. |
| Keywords: | labour economics ; |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umaror:2012007&r=evo |
| By: | Eichberger, Jürgen; Oechssler, Jörg; Schnedler, Wendelin |
| Abstract: | As illustrated by the famous Ellsberg paradox, many subjects prefer to bet on events with known rather than with unknown probabilities, i.e., they are ambiguity averse. In an experiment, we examine subjects’ choices when there is an additional source of ambiguity, namely, when they do not know how much money they can win. Using a standard independence assumption, we show that ambiguity averse subjects should continue to strictly prefer the urn with known probabilities. In contrast, our results show that many subjects no longer exhibit such a strict preference. This should have important ramifications for modeling ambiguity aversion. |
| Keywords: | ambiguity aversion; uncertainty; minmax-expected utility |
| JEL: | D81 C91 |
| Date: | 2012–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:awi:wpaper:0528&r=evo |
| By: | Paolo Ghirardato; Marciano Siniscalchi |
| Abstract: | This paper considers local and global multiple-prior representations of ambiguity for preferences that are (i) monotonic, (ii) Bernoullian, i.e. admit an affine utility representation when restricted to constant acts, and (iii) locally Lipschitz continuous. We do not require either Certainty Independence or Uncertainty Aversion. We show that the set of priors identified by Ghirardato, Maccheroni, and Marinacci (2004)’s ‘unambiguous preference’ relation can be characterized as a union of Clarke differentials. We then introduce a behavioral notion of ‘locally better deviation’ at an act, and show that it characterizes the Clarke differential of the preference representation at that act. These results suggest that the priors identified by these preference statements are directly related to (local) optimizing behavior. |
| Keywords: | Ambiguity, Optimization, Robustness, Derivative. |
| JEL: | D81 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wpaper:255&r=evo |
| By: | Ugo Pagano |
| Abstract: | Love, War and Culture have all played an important role in the evolution of human institutions and they have been characterized by complex relationships. War can select unselfish groups ready to sacrifice themselves for the love of their communities that they recognize to be culturally different from the others. At the same time, horizontal cultural differentiation cannot be taken for granted. Culture is the outcome of long evolutionary processes. It requires some human specific characteristics, including a large brain, that are likely to have been influenced by sexual selection and by the peculiar structure of human love affairs. Thus, if war may have generated love, also the reverse may be true: by favoring the development of human culture, love may have produced the conditions for war among culturally differentiated groups. In turn, war may have co-evolved with group solidarity only under the prevailing social arrangements of hunting and gathering economies. In general, human relations have been influenced by the prevailing features of the goods (private, public and positional) that have characterized production in different stages of history. They have been embedded in institutions involving very different levels of inequality, ranging from mostly egalitarian hunting and gathering societies to typically hierarchical agrarian societies and to wealthdifferentiated industrial societies. The perspectives of the present-day knowledge-intensive economy can also be seen through the same institutional approach to human evolution. The different nature of contemporary production processes involves a new set of alternative possible arrangements that have different implications for social (in)equality and different capabilities to satisfy basic human needs. |
| Keywords: | Evolution, Complementarities, Human Capabilities, Knowledge, |
| JEL: | B20 N40 P51 J16 J13 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:632&r=evo |