nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2012‒10‒27
seven papers chosen by
Matthew Baker
City University of New York

  1. Trust, Values and False Consensus By Butler, Jeffrey V.; Giuliano, Paola; Guiso, Luigi
  2. The Role of Social Networks and Peer Effects in Education Transmission By Sebastian Bervoets; Antoni Calvó-Armengol; Yves Zenou
  3. Understanding and Improving the Social Context of Well-Being By John F. Helliwell
  4. Sustainable Consumption and Consumer Sovereignty By Christian Schubert; Andreas Chai
  5. Deception: The Role of Guilt By Pierpaolo Battigalli; Gary Charness; Martin Dufwenberg
  6. Why are Latin Europeans less happy? The impact of hierarchy By Brule, Gael; Veenhoven, Ruut
  7. Truth-Telling: A Representative Assessment By Abeler, Johannes; Becker, Anke; Falk, Armin

  1. By: Butler, Jeffrey V. (Einaudi Institute for Economics and Finance); Giuliano, Paola (University of California, Los Angeles); Guiso, Luigi (Einaudi Institute for Economics and Finance)
    Abstract: Trust beliefs are heterogeneous across individuals and, at the same time, persistent across generations. We investigate one mechanism yielding these dual patterns: false consensus. In the context of a trust game experiment, we show that individuals extrapolate from their own type when forming trust beliefs about the same pool of potential partners – i.e., more (less) trustworthy individuals form more optimistic (pessimistic) trust beliefs - and that this tendency continues to color trust beliefs after several rounds of game-play. Moreover, we show that one's own type/trustworthiness can be traced back to the values parents transmit to their children during their upbringing. In a second closely-related experiment, we show the economic impact of mis-calibrated trust beliefs stemming from false consensus. Mis-calibrated beliefs lower participants' experimental trust game earnings by about 20 percent on average.
    Keywords: trust, trustworthiness, culture, false consensus
    JEL: A1 A12 D1 Z1
    Date: 2012–10
  2. By: Sebastian Bervoets (CNRS, Greqam); Antoni Calvó-Armengol (This author is deceased (Date: 03 Nov 2007)); Yves Zenou (Stockholm University, IFN)
    Abstract: We propose a dynastic model in which individuals are born in an educated or uneducated environment that they inherit from their parents. We study the role of social networks on the correlation in the parent-child educational status independent of any parent-child interaction. We show that the network reduces the intergenerational correlation, promotes social mobility and increases the average education level in the population. We also show that a planner that encourages social mobility also reduces social welfare, hence facing a tradeoff between these two objectives. When individuals choose the optimal level of social mobility, those born in an uneducated environment always want to leave their environment while the reverse occurs for individuals born in an educated environment.
    Keywords: Social mobility, strong and weak ties, intergenerational correlation, education.
    JEL: I24 J13 Z13
    Date: 2012–03–30
  3. By: John F. Helliwell
    Abstract: The paper first attempts to demonstrate the fundamental importance of the social context. The related evidence is drawn from recent theoretical and empirical advances in the study of subjective well-being. Treating people’s self-assessments of the quality of their lives as valid measures of well-being exposes the importance of the social context and suggests new ways to design better policies. The paper starts with demonstrations of the unexpectedly great well-being consequences of social and pro-social behavior. In addition, evidence is advanced to show an evolutionary fitness for social and pro-social behaviors above and beyond those flowing through their direct consequences for subjective well-being. This is followed by discussion of specific measures of the social context, of the fundamental importance of trust as social glue, and of several experiments designed to improve subjective well-being.
    JEL: D6 I28 N30
    Date: 2012–10
  4. By: Christian Schubert; Andreas Chai
    Abstract: There is a growing consensus in Ecological Economics that consumer preferences are neither fixed nor given, but rather endogenously determined by socio-economic and institutional factors. Hence, policy may promote "green" preferences directly. Yet any intervention in processes of preference formation seems to conflict with widely held liberal intuitions, imperfectly represented by the principle of Consumer Sovereignty (CS). We argue that a suitably refined, dynamic version of CS may not stand in the way of certain preference-shaping policies. By exploring different modes of consumer learning that imply varying degrees of behavioral lock-in, we show that there is a scope for policies that influence preference formation without violating CS. This extends the range of normatively acceptable sustainability policies.
    Keywords: Consumer Behavior, Consumer Welfare, Evolutionary Economics, Sustainability, Consumer Sovereignty
    JEL: D11 D63 Q58
    Date: 2012–10–11
  5. By: Pierpaolo Battigalli; Gary Charness; Martin Dufwenberg
    Abstract: Gneezy (2005) reports evidence indicating that in some settings people do not like to lie. In many other situations people do not suffer when they lie. We show that the theory of simple guilt can accommodate these observations.
    Date: 2012
  6. By: Brule, Gael; Veenhoven, Ruut
    Abstract: Happiness in the North European is substantially higher than in the South European nations. Only part of that difference can be explained by economic prosperity. This paper explores the effect of social hierarchy. A comparison of contemporary survey findings show that power distance is more pronounced in the South than in the North of Eurpe. Macro‐sociological theory is used to provide an historical account of this difference and it can be used to explain why happiness is ower in hierarchical societies.
    Keywords: life satisfaction; power distance; cross cultural; macro sociology
    JEL: A13 I31 D60 B15
    Date: 2012
  7. By: Abeler, Johannes (University of Oxford); Becker, Anke (University of Bonn); Falk, Armin (University of Bonn)
    Abstract: A central assumption of the canonical cheap talk literature is that people misreport their private information if this is to their material benefit. Recent evidence from laboratory experiments with student subjects suggests, however, that while many people do report the payoff-maximizing outcome, some report their private information truthfully or at least do not lie maximally. We measure truth-telling outside the laboratory by calling a representative sample of the German population at home. In our setup, participants have a strong monetary incentive to misreport, misreporting cannot be detected, and reputational concerns are negligible. Yet, we find that aggregate reporting behavior closely follows the expected truthful distribution. Our results underline the importance of lying costs and raise questions regarding the influence of the decision-making environment and the elicitation mode on reporting behavior.
    Keywords: private information, cheap talk, honesty, lying costs, representative experiment
    JEL: C93 D01 D82 D83
    Date: 2012–10

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