nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2012‒11‒03
twelve papers chosen by
Matthew Baker
City University of New York

  1. Strategic commitment and cooperation in experimental games of strategic complements and substitutes By Embrey Matthew; Mengel Friederike; Peeters Ronald
  2. Naive Responses to Kind Delegation By Gerald Eisenkopf; Urs Fischbacher
  3. The Effect of Social Fragmentation on Public Good Provision: an Experimental Study By Surajeet Chakravarty; Miguel A. Fonseca
  4. Endogenous labour supply, habits and aspirations By Luciano Fanti
  5. Habits, aspirations and endogenous fertility By Luciano Fanti
  6. The Short-Run and Long-Run Effects of Behavioral Interventions: Experimental Evidence from Energy Conservation By Hunt Allcott; Todd Rogers
  7. On the Sources of Risk Preferences in Rural Vietnam By Anh Duc Dang
  8. Loss Aversion and Consumption Choice: Theory and Experimental Evidence By Karle, Heiko; Kirchsteiger, Georg; Peitz, Martin
  9. Longevity and savings in an OLG small open economy with endogenous labour supply and intra-family old-age support By Luciano Fanti
  10. Parent Transmit Happiness along with Associated Values and Behaviors to Their Children: A Lifelong Happiness Divided? By Bruce Headey; Ruud Muffels; Gert G. Wagner
  11. Does the stork deliver happiness? Parenthood and life satisfaction By Gregori Baetschmann; Kevin E. Staub; Raphael Studer
  12. Resilience to Economic Shocks and the Long Reach of Childhood Bullying By Nattavudh Powdthavee

  1. By: Embrey Matthew; Mengel Friederike; Peeters Ronald (METEOR)
    Abstract: We study the impact of strategic commitment on cooperation in indefinitely repeated games ofstrategic substitutes (Cournot) and complements (Bertrand) using laboratory experiments. Overall,strategic commitment has no effect on cooperation with strategic substitutes and a negative onewith strategic complements. In the absence of strong strategic commitment, we find morecooperation in the complements game than in the substitutes game. However, when subjects are morecommitted to initial plans, a higher level of cooperation is achieved with strategic substitutes.These results cannot be explained by standard risk-dominance or renegotiation considerations, butare consistent with a notion of fear of miscoordination based on minmax regret.
    Keywords: microeconomics ;
    Date: 2012
  2. By: Gerald Eisenkopf (Department of Economics, University of Konstanz, Germany); Urs Fischbacher (Department of Economics, University of Konstanz, Germany)
    Abstract: People do not like to delegate the distribution of favors. To explain this reluctance we disentangle reward motives in an experiment, in which an investor can directly transfer money to a trustee or delegate this decision to another investor. Varying the transfer values of investor and delegate, we find that the trustee’s rewards follow a rather simple pattern. In all situations, both investors are rewarded, but the person who ultimately decides gets a higher reward. Unlike studies on the punishment of delegated unkind decisions our results do not reveal sophisticated reward behavior that takes the responsibility of people into account.
    Keywords: Delegation, trust, reciprocity, intentions, experiment
    JEL: C91 D63
    Date: 2012–08–02
  3. By: Surajeet Chakravarty (Department of Economics, University of Exeter); Miguel A. Fonseca (Department of Economics, University of Exeter)
    Abstract: We study the role of social identity in determining the impact of social frag- mentation on public good provision using laboratory experiments. We nd that as long as there is some degree of social fragmentation, increasing it leads to lower public good provision. This is mainly because the share of those who contribute fully to the public good diminishes with social fragmentation, while the share of free-riders is unchanged, which suggests social identity preferences drive our result, as opposed to self-interest. Importantly, socially homogeneous groups do not generate the highest contributions: some social diversity is actually welfare-improving. Finally, social fragmentation is felt differently for visible minorities, whose contributions are higher than minority groups whose actions are not identiable.
    Keywords: Social Identity, Public Goods, Social Fragmentation, Experiments.
    JEL: C92 D02 D03 H41
    Date: 2012
  4. By: Luciano Fanti
    Abstract: Motivated by the increasing literature on endogenous preferences, this paper investigates the implications of the introduction of habit and aspiration formation when labour supply is endogenous, in an OLG small open economy. In contrast with models with exogenous labour supply where aspirations always reduce economic performance, we show that in a model with endogenous labour supply greater aspirations lead to a higher long run savings and economic performance, through their impact on the labour/leisure choice.
    Keywords: Endogenous preferences; Fertility; OLG model.
    JEL: J22 O41
    Date: 2012–09–01
  5. By: Luciano Fanti
    Abstract: Motivated by the increasing literature on endogenous preferences as well as on endogenous fertility, this paper investigates the implications of the interaction of the endogenous determination of the number of children with habit and aspiration formation in an OLG model. In contrast with the previous literature, we show that greater aspirations may lead to higher savings, and more interestingly, always increase the neoclassical economic growth.
    Keywords: Endogenous preferences; Fertility; OLG model.
    JEL: J13 O41
    Date: 2012–09–01
  6. By: Hunt Allcott; Todd Rogers
    Abstract: Interventions to affect repeated behaviors, such as smoking, exercise, or workplace effort, can often have large short-run impacts but uncertain or disappointing long-run effects. We study one part of a large program designed to induce energy conservation, in which home energy reports containing personalized feedback, social comparisons, and energy conservation information are being repeatedly mailed to more than five million households across the United States. We show that treatment group households reduce electricity use within days of receiving each of their initial few reports, but these immediate responses decay rapidly in the months between reports. As more reports are delivered, the average treatment effect grows but the high-frequency pattern of action and backsliding attenuates. When a randomly-selected group of households has reports discontinued after two years, the effects are much more persistent than they had been between the initial reports, implying that households have formed a new "capital stock" of physical capital or consumption habits. We show how assumptions about long-run persistence can be important enough to change program adoption decisions, and we illustrate how program design that accounts for the capital stock formation process can significantly improve cost effectiveness.
    JEL: D03 D11 L97 Q41
    Date: 2012–10
  7. By: Anh Duc Dang
    Abstract: In this paper, I provide new empirical evidence that the natural environment can shape individual risk preferences. By combining historical data on weather variation and contemporary survey questions on risk aversion, I find that risk aversion is significantly different for people who live in areas that have suffered high frequency of natural disasters. In particular, households highly affected by weather volatility show a longterm risk aversion and are more willing to buy insurance to protect crop losses. The finding also supports the hypothesis that when people are used to live in a risky environment, an incremental increase in risk affects their risk preferences less.
    JEL: D03 Q54 O53
    Date: 2012–10
  8. By: Karle, Heiko; Kirchsteiger, Georg; Peitz, Martin
    Abstract: In this paper we analyze a consumer choice model with price uncertainty, loss aversion, and expectation-based reference points. The implications of this model are tested in an experiment in which participants have to make a consumption choice between two sandwiches. We make use of the fact that participants differ in their reported taste difference between the two sandwiches and the degree of loss aversion which we measure separately. We find that more loss-averse participants are more likely to opt for the cheaper sandwich provided that their reported taste difference is below some threshold, confirming the model’s predictions.
    Keywords: Contextual Reference Points; Loss Aversion; Reference-Dependent Utility
    JEL: C91 D01 D11 D83
    Date: 2012–10
  9. By: Luciano Fanti
    Abstract: In a simple OLG small open economy with endogenous fertility, endogenous labour supply and intra-family old-age support, we show, in contrast with the preceding literature, that the saving rate is always reduced by an increasing longevity, while fertility is unaffected. As a consequence population ageing lead to an unambiguous increase in the long-run per capita foreign debt. Moreover transfers from children to parents are increasing (decreasing) for low (high) longevity rates.
    Keywords: Intra-family old-age support; Overlapping generations; Longevity; Labour supply.
    JEL: H52 J13 O41
    Date: 2012–09–01
  10. By: Bruce Headey; Ruud Muffels; Gert G. Wagner
    Abstract: There are strong two-way links between parent and child happiness (life satisfaction), even for ‘children’ who have grown up, moved to their own home and partnered themselves. German panel evidence shows that transmission of (un)happiness from parents to children is partly due to transmission of values and behaviors known to be associated with happiness (Headey, Wagner and Muffels, 2010, 2012). These values and behaviors include giving priority to pro-social and family values, rather than material values, maintaining a preferred balance between work and leisure, active social and community participation, and regular exercise. Both parents have about equal influence on the values and behaviors which children adopt. However, the life satisfaction of adult ‘children’ continues to be directly influenced by the life satisfaction of their mothers, with the influence of fathers being only indirect, via transmission of values and behaviors. There appears to be a lifelong happiness dividend (or unhappiness dividend) due to parenting.
    Keywords: Life satisfaction, inter-generational transmission, German panel survey (SOEP)
    Date: 2012
  11. By: Gregori Baetschmann; Kevin E. Staub; Raphael Studer
    Abstract: This paper examines the relationship between parenthood and life satisfaction using longitudinal data on women from the German Socio-Economic Panel. Previous studies have focused on satisfaction differences between parents and comparable childless adults, mostly finding small and often negative effects of parenthood. These comparisons of ex-post similar individuals are problematic if a self-selection into motherhood exists. In this study we examine the selection issue in detail by exploiting the extended longitudinal dimension of the panel to track self-reported life satisfaction of women eventually to become mothers and of women eventually attaining a completed fertility of zero. We document that these groups' satisfaction paths diverge around five years before mothers' first birth, even after adjusting for differences in observables. In our estimations, we employ matching and regression techniques which account for this selection into motherhood. We find motherhood to be associated with substantial positive satisfaction gains.
    Keywords: Happiness, subjective well-being, children, fertility, mother- hood, parenthood, life cycle, selection, matching, fixed effects
    JEL: D10 J11 J12 J13
    Date: 2012–10
  12. By: Nattavudh Powdthavee
    Abstract: This paper investigates whether people's ability to withstand and adapt to one of the most important economic shocks - job loss - is determined early on in childhood. Using nationally representative longitudinal data that tracks almost 3,000 children into adulthood, we show that the negative effect of unemployment on mental health and life satisfaction is almost four times larger for workers who had been bullied a lot in their early life. We also find zero adaptation to unemployment for these individuals over time. Although the results should be viewed as illustrative and more research is needed, their potential implications for economists and policy makers are discussed.
    Keywords: Resilience, adaptation, happiness, unemployment, childhood, well-being
    JEL: D03 I19 J64
    Date: 2012–10

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