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on Evolutionary Economics |
| By: | Rtischev, Dimitry |
| Abstract: | Evolution of preferences models often assume that all agents display and observe preferences costlessly. Instead, we endogenize mindsight (to observe preferences) and transparency (to show preferences) as slightly costly mechanisms that agents may or may not possess. Unlike in the costless models, we show that universal rule-rationality, mindsight and transparency do not constitute an equilibrium but universal act-rationality, mind-blindness, and opaqueness do. We also find that rule-rationality, mindsight, and transparency may exist in evolved populations, albeit only in a portion of the population whose size fluctuates along an orbit around a focal point. We apply our results to Ultimatum and Trust games to explore how costly and optional mindsight may affect economic performance in interactions among evolved agents. |
| Keywords: | evolution of preferences; act-rationality; rule-rationality; ultimatum game; trust game |
| JEL: | D83 C73 D87 |
| Date: | 2012–08–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:40890&r=evo |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:40714&r=evo |
| By: | Vostroknutov Alexander (METEOR) |
| Abstract: | A model of belief dependent preferences in finite multi-stage games with observable actions isproposed. It combines two dissimilar approaches: incomplete information (Levine, 1998) andintentionality (Dufwenberg and Kirchsteiger, 2004; Falk and Fischbacher, 2006). Incompleteinformation is important because social preferences are not directly observable; intentions arefound to be indispensable in explaining behavior in games (Falk, Fehr, and Fischbacher, 2008). Inthe model it is assumed that the players have social attitudes that define their socialpreferences. In addition, players care differently about the payoffs of other players depending ontheir beliefs about their social attitude and possibly on the beliefs of higher orders. As thegame unfolds players update their beliefs about the types of other players. An action of a playershows intention when she chooses it anticipating future belief updating by others. A reasoningprocedure is proposed that allows players to understand how to update beliefs by constructing asequence of logical implications. |
| Keywords: | microeconomics ; |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umamet:2012015&r=evo |
| By: | Brekke, Kjell Arne (Dept. of Economics, University of Oslo); Konow , James (Department of Economics, Loyola Marymount University,); Nyborg, Karine (Dept. of Economics, University of Oslo) |
| Abstract: | In social dilemmas, there is tension between cooperation that promotes the common good and the pursuit of individual interests. International climate change negotiations provide one example: although abatement costs are borne by individual countries, the benefits are shared globally. We study a multi-period, threshold public goods game with unequally endowed participants and communication in which the decision variable is framed in three seemingly inconsequential ways: as absolute contributions, contributions relative to endowments and in terms of the effects of contributions on final payoffs. We find considerable agreement that “rich” (or high endowed) persons contribute more than “poor” (or low endowed) individuals at levels that are invariant across frames. Frames do, however, significantly affect both preferred and actual contributions for the poor: they contribute significantly less when the decision variable makes the effects on final payoffs salient than when it is framed in terms of absolute contributions. Contributions are explained mostly by self-interest, justice preferences, and experiencing failed negotiations, but we find no effects of reciprocity toward individuals or of the suggestions of others about what one should contribute. |
| Keywords: | Public good game; threshold; communication; fairness; endowment heterogeneity |
| JEL: | D63 D64 H41 |
| Date: | 2012–05–21 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2012_016&r=evo |
| By: | Michele Belot (University of Oxford); Marcel Fafchamps (University of Oxford) |
| Abstract: | Some evidence suggests that people behave more pro-socially in small groups than in market-like situations. We construct an experiment in which people choose between allocations that affect their payoff and that of others. The choices of some participants are randomly selected to determine payoffs. We test whether people exhibit different other-regarding preferences depending on how the choice is framed. To mimic a market-like environment, we ask subjects to select a type of partner, either high or low. Selecting a partner of a given type effectively removes this pairing from other players. We compare this treatment to two alternatives where people are first assigned to groups of two high and two low participants. In one treatment, they are then asked to choose between a high and low partner. In the other, they are asked to choose between two payoff allocations for the four individuals. These two treatments make the implication of one's choice on others more salient. We find that most subjects pursue their self-interest, but high payoff participants behave more altruistically in small groups while low payoff participants display more invidious choices in the market-like environment. The implication is that while some efficiency can be achieved in small groups thanks to altruism, a market-like environment reduces good samaritan tendencies, possibly because the negative effect of one's choice on others is less salient. |
| Keywords: | Behavioral experiment, Social preferences, Partnership formation |
| JEL: | C90 D63 D64 Z13 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:cex:dpaper:2012001&r=evo |
| By: | Friedman, Daniel; Cason, Timothy N; Hopkins, Ed |
| Keywords: | Economics, experiments, learning, mixed equilibrium, continuous time |
| Date: | 2012–07–19 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:ucscec:qt6947v2f5&r=evo |
| By: | Markussen, Thomas; Reuben, Ernesto; Tyran, Jean-Robert |
| 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: | public goods; competition; tournament; cooperation; voting |
| JEL: | D72 H41 J33 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9099&r=evo |
| By: | Ismayilov, H.; Potters, J.J.M. (Tilburg University, Center for Economic Research) |
| Abstract: | Abstract: We implement a trust game in which the trustee can write a free-form pre-play message for the trustor. The main twist in our design is that there is a 50% probability that the message is delivered to the trustor and a 50% probability that the message is replaced by an empty sheet. We find that even when messages are not delivered trustees who make a promise are significantly more likely to act trustworthy than those who do not make a promise. This suggests that a promise has a commitment value which is independent of its impact on the trustor. Interestingly, we also find that both trustees who make a promise and those who do not make a promise are more likely to be trustworthy if their message is delivered to the trustor. This means that communication increases trustworthiness irrespective of the content of messages. |
| Keywords: | Promises;communication;trust;beliefs;experimental economics. |
| JEL: | C91 D03 D82 L15 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2012064&r=evo |
| By: | Cappelen, Alexander W. (Dept. of Economics, Norwegian School of Economics and Business Administration); Nielsen, Ulrik H. (University of Copenhagen); Sørensen, Erik Ø. (Dept. of Economics, Norwegian School of Economics and Business Administration); Tungodden, Bertil (Dept. of Economics, Norwegian School of Economics and Business Administration); Tyran, Jean-Robert (University of Vienna) |
| Abstract: | It has been shown that participants in the dictator game are less willing to give money to the other participant when their choice set also includes the option to take money. We examine whether this effect is due to the choice set providing a signal about entitlements in a setting where entitlements initially may be considered unclear. We find that the share of positive transfers depends on the choice set even when there is no uncertainty about entitlements, and that this choice-set effect is robust across a heterogenous group of participants recruited from the general adult population in Denmark. The findings are consistent with dictator giving partly being motivated by a desire to signal that one is not entirely selfish or by a desire to follow a social norm that is choice-set dependent. |
| Keywords: | Dictator game; motivation; choice |
| JEL: | C91 D63 |
| Date: | 2012–07–06 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2012_014&r=evo |
| By: | Ronald Peeters; Marc Vorsatz; Markus Walzl |
| Abstract: | We conduct a laboratory experiment with a constant-sum sender-receiver game to investigate the impact of individuals' first- and second-order beliefs on truth-telling. While senders are more likely to lie if they expect the receiver to trust their message, they are more likely to tell the truth if they belief the receiver expects them to tell the truth. Our results therefore indicate that second-order beliefs are an important component of the motives for individuals in strategic information transmission. |
| Keywords: | Experiment, Sender-receiver games, Strategic information transmission, Guilt-from-blame, let-down aversion |
| JEL: | C70 C91 D03 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2012-17&r=evo |
| By: | Bode, Alexander; Müller, Katja |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:dar:wpaper:58997&r=evo |
| By: | Philip A. Curry (Department of Economics, University of Waterloo); John E. Roemer (Departments of Political Science and Economics, Yale University) |
| Abstract: | In Nash equilibrium, agents are autarchic in their optimization protocol, whereas in Kantian equilibrium, they optimize in an interdependent way. Typically, researchers into the evolution of homo economicus treat preferences as being determined by selective adaptation, but hold fixed the optimization protocol as autarchic. Here, we ask whether natural selection might choose the optimizing protocol to be either autarchic or interdependent. That is, will Kantian players, for whom the stable concept is Kantian equilibrium drive Nash players (for whom the stable concept is Nash equilibrium) to extinction, or otherwise? The answer depends upon whether players can signal their type to others. |
| JEL: | C73 C62 D64 |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:wat:wpaper:1206&r=evo |
| By: | Geoffroy de Clippel |
| Abstract: | Implementation theory assumes that participants’ choices are rational,in the sense of being derived from the maximization of a contextindependent preference. The paper investigates implementation under complete information when the mechanism designer is aware that individuals suffer from cognitive biases that lead to violations of IIA, or cannot exclude the possibility of such “irrational” behavior. |
| Keywords: | # |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:bro:econwp:2012-6&r=evo |
| By: | Esther Blanco; Javier Lozano |
| Abstract: | This paper develops an evolutionary bio-economic model for hunting, farming and tourism (non-consumptive and safari hunting) to study the determinants of the prosperity of conservancy programs. The model is inspired in the Conservancy program of Namibia, despite it is of more general applicability to other contexts. We explore the relevance of the design attributes of conservancy programs in their prosperity in the long-run as well as the relevance of variables of the context of application highlighted in empirical literature. In addition, we explore the welfare implications of conservancies for local communities and its compatibility with conservation objectives. We discuss the results of the conservancy model with respect to the benchmark of open access and of compensation policies for agricultural looses out of wildlife. |
| Keywords: | Bioeconomic modeling, Community-based management, Wildlife |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2012-18&r=evo |