nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2013‒01‒07
twenty papers chosen by
Matthew Baker
City University of New York

  1. On the coevolution of social norms in primitive societies By L. Bagnoli; G. Negroni
  2. Growing groups, cooperation, and the rate of entry By Eva Ranehill; Frédéric Schneider; Roberto A. Weber
  3. Nutrition, Governance and Violence: A Framework for the Analysis of Resilience and Vulnerability to Food Insecurity in Contexts of Violent Conflict By Patricia Justino
  4. Separating Will from Grace: An Experiment on Conformity and Awareness in Cheating By Toke Fosgaard; Lars Gaarn Hansen; Marco Piovesan
  5. Relative Consumption Concerns or Non-Monotonic Preferences? By Inga Hillesheim; Mario Mechtel
  6. Seeds of Distrust: Conflict in Uganda By Dominic Rohner; Mathias Thoenig; Fabrizio Zilibotti
  7. How Much Do Others Matter? Explaining Positional Concerns for Different Goods and Personal Characteristics By Inga Hillesheim; Mario Mechtel
  8. Heartbeat and Economic Decisions: Observing Mental Stress among Proposers and Responders in the Ultimatum Bargaining Game By Uwe Dulleck; Markus Schaffner; Benno Torgler
  9. Temporal stability of risk preference measures By Katerina Straznicka
  10. WP 124: Conditions and motives for voluntary sharing. Results of a solidarity game experiment By Paul Beer; Maarten Berg
  11. Intergenerational Transmission of Risk Preferences, Entrepreneurship, and Growth By Fabrizio Zilibotti; Matthias Doepke
  12. Does Trust Favor Macroeconomic Stability? By Marc Sangnier
  13. Behavioral Foundations of Sustainability Transitions By Miklós Antal; Ardjan Gazheli; Jeroen van den Bergh
  14. Shared Societies and Armed Conflict: Costs, Inequality and the Benefits of Peace By Patricia Justino
  15. Trust and fertility dynamics By Arnstein Aassve; Francesco Billari; Léa Pessin
  16. Trust Issues: Evidence from Second Generation Immigrants By Ljunge, Martin
  17. Mathematical Institutional Economics By Martin Shubik
  18. Technical change in a combined Classical - Evolutionary multi-sector economy: Causes, Effects and implications for economic and social policy By Rainer, A.
  19. Are the Smart Kids More Rational ? By Sabrina Bruyneel; Laurens Cherchye; Sam Cosaert; Bram De Rock; Siegfried Dewitte
  20. 12-05 "Are Women Really More Risk-Averse than Men?" By Julie A. Nelson

  1. By: L. Bagnoli; G. Negroni
    Abstract: Two parties bargaining over a pie, the size of which is determined by their previous investment decisions. The bargaining rule is sensitive to investment behavior. Two games are considered. In both, bargaining proceeds according to the Nash Demand Game when a symmetric investments pro?le is observed. When, on the other hand, an asymmetric investments pro?le is observed, we assume that bargaining proceeds according to the Ultimatum Game in one case and according to a Dictator Game in the other. We hereby show that in both games when a unique stochastically stable outcome exists it supports an homogeneous behavior in the whole population both at the investment stage and at the distribution stage. A norm of investment and a norm of division must therefore coevolve in the two games, supporting both the efficient investment pro?le and the egalitarian distribution of the surplus, respectively. The two games differ depending on the conditions needed for the two norms to coevolve. The games are proposed to explain the social norms used in modern hunter-gatherer societies.
    JEL: C78 D83 L14 Z13
    Date: 2012–12
  2. By: Eva Ranehill; Frédéric Schneider; Roberto A. Weber
    Abstract: We study the stability of voluntary cooperation to entry by individuals coming from groups with low cooperation rates. We investigate the effect of varying entry rates on sustained cooperation. In a finitely-repeated public good game with economies of scale, we initially allot participants to small, “High-cooperation” groups and large, “Low-cooperation” groups. We then study movement from the “Low” groups into the “High” groups under two main treatment conditions that vary the rate of movement. We find that fast growth disrupts efficient public good provision; but when moved in slowly, members of “failed” groups adapt to contribution levels in cooperative groups. This behavior is generally consistent with a belief-driven explanation similar to Fischbacher and Gächter (2010). In a third condition, in which participants in the “High” group decide on the rate of entry by voting, growth generally occurs slowly but stops short of the efficient group size. Interestingly, newcomers, not incumbents, veto further entry. We conclude that the right rate of entry can greatly facilitate cooperation, but that overly cautious expansion may limit the realization of potential gains from growth.
    Keywords: Voluntary cooperation, experiment, public good game
    JEL: C92 C72
    Date: 2012–12
  3. By: Patricia Justino (Institute of Development Studies, University of Sussex)
    Abstract: We show that armed conflict affects social capital as measured by trust and associational membership. Using the case of Uganda and two rounds of nationally representative individual-level data bracketing a large number of battle events, we find that self-reported generalized trust and associational membership decreased during the conflict in districts in which battle events took place. Exploiting the different timing of two distinct waves of violence, we provide suggestive evidence for a rapid recovery of social capital. Evidence from a variety of identification strategies, including difference-indifference and instrumental variable estimates, suggests that these relationships are causal.
    Date: 2012–11
  4. By: Toke Fosgaard (Institute of Food and Resource Economics, University of Copenhagen); Lars Gaarn Hansen (Institute of Food and Resource Economics, University of Copenhagen); Marco Piovesan (Institute of Food and Resource Economics, University of Copenhagen)
    Abstract: In this paper we investigate if people cheat more when they observe their peers cheating because they conform or because they become aware that cheating is something to actively consider. In our experiment subjects toss a coin in private and report the outcome (white or black). We reward only those who report white and leave them the possibility to cheat without being discovered. In our 2x2 experimental design, we manipulated subjects’ report sheet to i) suggest (or not) that cheating is an option; ii) suggest that their peers were honest (or dishonest). We find that increasing awareness of cheating as an option significantly increases the probability that women cheat; whereas men – who are already aware that cheating is an option - are not affected. When we suggest that peers have cheated, men cheat significantly more, whereas women do not.
    Keywords: cheating, norms, conformity, awareness, gender differences
    JEL: D63 K42 D81
    Date: 2012–12
  5. By: Inga Hillesheim; Mario Mechtel (Institute for Labour Law and Industrial Relations in the EU, University of Trier)
    Abstract: We conduct a classroom survey to investigate the willingness to sacrifice consumption in absolute terms in order to ascend above others in terms of consumption levels. In contrast to other studies using survey methodologies, participants are divided into a treatment and a control group. This allows us to distinguish whether choosing less in absolute terms is really induced by relative consumption concerns, or else by nonmonotonic preferences. We find that relative consumption concerns provide a good explanation for choosing less in the case of some goods, while this is not the case for a number of other goods.
    Keywords: status consumption, social status, behavioral economics, other-regarding preferences
    JEL: C91 D63 D10
    Date: 2012–09
  6. By: Dominic Rohner (Department of Economics, University of Zurich); Mathias Thoenig (Department of Economics, University of Lausanne); Fabrizio Zilibotti (Department of Economics, University of Zurich, and Institute for International Economic Studies, Stockholm University)
    Abstract: We study the effect of civil conflict on social capital, focusing on the experience of Uganda during the last decade. Using individual and county-level data, we document large causal effects on trust and ethnic identity of an exogenous outburst of ethnic conflicts in 2002-05. We exploit two waves of survey data from Afrobarometer 2000 and 2008, including information on socioeconomic characteristics at the individual level, and geo-referenced measures of fighting events from ACLED. Our identification strategy exploits variations in the intensity of fighting both in the spatial and cross-ethnic dimensions. We find that more intense fighting decreases generalized trust and increases ethnic identity. The effects are quantitatively large and robust to a number of control variables, alternative measures of violence, and different statistical techniques involving ethnic and spatial fixed effects and instrumental variables. We also document that the post-war effects of ethnic violence depend on the ethnic fractionalization. Fighting has a negative effect on the economic situation in highly fractionalized counties, but has no effect in less fractionalized counties. Our findings are consistent with the existence of a self-reinforcing process between conflicts and ethnic cleavages.
    Keywords: ethnicity, violence, fractionalization
    JEL: D74
    Date: 2012–02
  7. By: Inga Hillesheim; Mario Mechtel (Institute for Labour Law and Industrial Relations in the EU, University of Trier)
    Abstract: We test concerns for relative standing with respect to private consumption, income, leisure, savings, and personal characteristics, using data from a classroom survey. Our results show highest degrees of positionality for personal characteristics and income. In order to explain positionality, we employ survey participants’ ratings of items with respect to (i) observability and (ii) non-psychological negative externalities on others. Based on these ratings, our results show that non-psychological externalities play an important role for an item’s degree of positionality. In contrast to previous research, we find that there is no statistically significant effect of an item’s observability on its degree of positionality.
    Keywords: behavioral economics, relative consumption, other-regarding preferences, relative standing
    JEL: C91 D63 D10
    Date: 2012–11
  8. By: Uwe Dulleck; Markus Schaffner; Benno Torgler
    Abstract: In line with experimental economics' goal of better understanding human economic decision making, early research on the ultimatum bargaining game (see Güth Schmittberger, and Schwarze 1982) demonstrated that motives other than pure monetary reward play a role. More recently, the development of of neuroeconomic research techniques has allowed physiological reactions to be recorded as signals of emotional response. In this study, we apply heart rate variability (HRV) to explore the behaviour and physiological reactions during the ultimatum bargaining game of not only responders but also proposers. Because this technology is small and non-intrusive, we are able to run our experiment using a standard experimental economic setup. We find that low offers by a proposer cause signs of mental stress in both the proposer and the responder; that is, both exhibit high ratios of low to high frequency activity in the HRV spectrum.
    Date: 2012–12
  9. By: Katerina Straznicka (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon)
    Abstract: We examine the temporal stability of risk preference measures obtained by different elicitation methods in a controlled laboratory experiment at two distinct times. Our results indicate remarkable temporal stability of risk measures at the aggregated level and temporal instability at the individual level. We control for the impact of, first, personality traits, and second, performance realized in a market game. When better market performers demonstrate more stable risk preferences, the impact of personality traits is marginal.
    Keywords: Time stability; Risk Preferences; Personality Theory; Experimental economics
    Date: 2012–12–21
  10. By: Paul Beer (AIAS, Universiteit van Amsterdam); Maarten Berg (AIAS, Universiteit van Amsterdam)
    Abstract: This paper studies experimentally the conditions and motives for voluntary solidarity, following a game theoretical approach. The ‘solidarity game’ that is used in this study consists of groups of four players and is based on the solidarity game of Selten and Ockenfels (1998). In each group, two winners, which are either randomly selected or on the basis of their performance on a quiz, distribute 20 credits each (reflecting real money). We tested four hypotheses regarding the effect of various conditions on voluntary sharing, related to the motives for solidary behaviour, viz. self-interest, fairness, neediness and meritocracy. For most of our hypotheses the experiments provided support, although there are a few exceptions. Players share more with others in the first round of the four shots game than in the one shot game, but their gifts decrease quickly as the game progresses, which confirms that they act largely out of self-interest. Players give more to a player from whom they have received money in the previous rounds (fairness, resulting in direct reciprocity). However, players do not give more to co-players who have been generous to others in the previous round, which would have been proof of indirect reciprocity. Players do not give more to a loser than to a winner in the current round, and, consequently, do not equalize the differences in revenue. However, they give more to players who have received relatively little in previous rounds, which suggests that neediness of the potential beneficiary is also a motive. Finally, winners give more in the random based conditions, when they do not really ‘deserve’ to be a winner, than in the performance based conditions, which offers support for the meritocracy hypothesis. The motives that the subjects expressed themselves for their sharing behaviour in answering some post-hoc questions, mirrors their actual behaviour pretty well. Additionally, we also analyse the effect of some personal characteristics, and the party preferences and media use of the players.
    Date: 2012–12
  11. By: Fabrizio Zilibotti (University of Zurich); Matthias Doepke (Northwestern University)
    Abstract: We develop a theory of the intergenerational transmission of risk preferences. Parents can instill either risk tolerance or risk aversion in their children, and face both altruistic and paternalistic motives in this process. Risk-tolerant children are more likely to benefit from profitable but risky opportunities, such as the career choice of being an entrepreneur. However, risk-tolerant children may also engage in other risky choices (such as smoking or riding motorcycles) that the parents disagree with. In our model, the transmission of risk preferences feeds back into the growth rate of the economy, because risk-taking entrepreneurs are essential for endogenous technological innovation. The theory has implications for how the extent and nature of risk in the economic environment affects the transmission of risk preferences, entrepreneurship, and growth.
    Date: 2012
  12. By: Marc Sangnier (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS)
    Abstract: This paper investigates the relationship between trust and macroeconomic volatility. An illustrative model rationalizes the relationship between trust and volatility. In this model, trust relaxes credit constraints and diminishes investment's procyclicality. I provide empirical evidence for the basic predictions of the model. Then, I show that higher trust is associated with lower macroeconomic volatility in a cross section of countries. This relationship persists when various covariates are taken into account. I use inherited trust of Americans as an instrumental variable for trust in their origin country to overcome reverse causality concerns. Using changes in inherited trust over the 20th century, I do not find clear evidence that increasing trust is also associated with decreasing volatility across time at the country level.
    Keywords: Trust, volatility, macroeconomic stability, social capital.
    JEL: E02 E30 N10
    Date: 2012–10
  13. By: Miklós Antal; Ardjan Gazheli; Jeroen van den Bergh
    Abstract: "Writings on sustainability transitions generally do not say much about the particularities of the behavior of individuals and organizations. This is somewhat surprising since an important problem which transition management needs to tackle is inertia or resistance to change. Transition policy needs to account for the bounded rationality and social interaction of agents so as to arrive at a more realistic view of the limits and opportunities for realizing a transition. System failures like lock-in, unpredictability and surprise in innovation systems, and network interaction between agents have received some attention, but their behavioral underpinnings can be improved. The identification of relevant stakeholders in transition processes and their unique behavioral features is crucial for understanding how to stimulate transitions. In this paper we investigate opportunities to integrate various theories and disciplinary views on behavior into thinking about sustainability transitions with the aim to arrive at recommendations for more effective policies. For this purpose, we combine insights from the literatures on agency in sustainability transitions, on environmental policy under bounded rationality and social interactions, and on behavioral foundations of learning and innovation."
    Keywords: Agency; behavioural economics; bounded rationality; innovation; learning; sustainability; transition
    JEL: D03 P28 P36 Q58
    Date: 2012–12
  14. By: Patricia Justino (Institute of Development Studies, University of Sussex)
    Abstract: This chapter examines how the relationship between economic exclusion, inequality, conflict and violence shape the goal of establishing shared societies. The chapter discusses how this impact is largely determined by the emergence and organisation of social and political institutions in areas of violent conflict. Two areas of institutional change are central to understanding the relationship between armed conflict and shared societies. The first is the change caused by armed conflict on social interactions and norms of trust and cooperation. The second is the influence exercised by informal mediators, informal service providers and informal systems of governance – often controlled by non-state armed actors – that emerge from processes of violence and are prevalent in areas of armed conflict. These forms of institutional transformation are central to understanding how societies may be able to restrict the use of violence as a strategic way of resolving social conflicts and how to transition from violence-ridden to shared societies.
    JEL: D63 D74 O17
    Date: 2012–10
  15. By: Arnstein Aassve; Francesco Billari; Léa Pessin
    Abstract: We argue that fertility trends in advanced societies are in part driven by differences in trust. The argument builds around the idea that trust implies individuals and couples being willing to outsource traditional family activities to other individuals outside their own family. Trust is therefore seen as a catalyser for the process of increased female labour force participation, the diffusion of childcare facilities, and hence a halt to the continuing fertility decline. Support of this hypothesis is drawn from the World Values Survey and European Values Survey. We present evidence both from country-level regressions and from a series of multilevel analyses. We find that trust by itself is positively associated with fertility over recent decades. Moreover, trust interacts with women’s education. In particular, as higher education for women has expanded, which traditionally is seen as a robust predictor for lower fertility, trust is a precondition for achieving higher fertility among those women with very high education.
    Keywords: Generalized trust, low fertility, women’s education, outsourcing, multilevel models
    Date: 2012–11
  16. By: Ljunge, Martin (Research Institute of Industrial Economics (IFN))
    Abstract: This paper estimates the intergenerational transmission of trust by studying second generation immigrants in 29 European countries with ancestry in 87 nations. There is significant transmission of trust on the mother’s side. The transmission is stronger in Northern Europe. Ancestry from more developed countries suggests a stronger transmission of trust, but the heterogeneity in ancestry dissipates for individuals who reside in Northern Europe. The results suggest an interaction between cultural background and current institutions, where building trust in Northern Europe is a long process but the adjustment to the trust levels in Southern and Eastern Europe is fast.
    Keywords: Intergenerational transmission; Trust; Immigrants; Cultural transmission; Integration of immigrants
    JEL: D13 D83 J62 Z13
    Date: 2012–12–19
  17. By: Martin Shubik (Cowles Foundation, Yale University)
    Abstract: An overview is given of the utilization of strategic market games in the development of a game theory based theory of money and financial institutions.
    JEL: C72 C73 E44
    Date: 2012–12
  18. By: Rainer, A.
    Abstract: The causes and effects of technical change are investigated in a multi-sector economy. The underlying modelling framework is a hybrid of Classical economic thinking as introduced by Ricardo (1821) and formalised by Sraffa(1960), and of Evolutionary economics following Schumpeter (1934)and Nelson & Winter (1982). The special case of one sector is elaborated at length, leading to several implications concerning economic and legal policy in the presence of ongoing technical change. This includes technological unemployment and technologically induced wage inequalities which are either temporary or persistent, and also the problem of effective demand in a dynamic economic environment is discussed. Within the model business cycles as a consequence of innovative general purpose technologies with subsequent technical progress can be illustrated.
    Keywords: evolutionary economics; replicator dynamics; technical change
    JEL: B52
    Date: 2012
  19. By: Sabrina Bruyneel; Laurens Cherchye; Sam Cosaert; Bram De Rock; Siegfried Dewitte
    Abstract: We conducted an experiment to collect data on consumption decisions made by children of different age categories. In particular, our experiment involves unsophisticated discrete consumption choices,and we present a rationality test that is specially designed for the resulting choice data. Our firstconclusion is that, in general, the observed children's consumption behavior is largely irrational. Next, we also investigate the relationship between the degree of rationality and the children's characteristics.Specically, we use teacher based assessments on several personal characteristics to investigate whether and to what extent smart children tend to behave more rational. Here, our main conclusion is that it is important to recognize the multidimensional nature of intelligence to obtain a balanced insight into the effect of intelligence on rationality.
    Keywords: rationality; children; revealed-preference; intelligence
    JEL: C14 C91 D12
    Date: 2012–12
  20. By: Julie A. Nelson
    Abstract: While a substantial literature in economics and finance has concluded that women are more risk averse than men, this conclusion merits reconsideration. Drawing on literatures in statistics and cognitive science, this essay discusses the important difference between drawing conclusions based on statistical inference, which concerns aggregates such as mean scores, and generalization, which posits characteristics of individuals classified into kinds. To supplement findings of statistical significance, quantitative measures of substantive difference (Cohen's d) and overlap (the Index of Similarity) are computed from the data on men, women, and risk used in 28 published articles. The results are considerably more mixed and overlapping than might be expected. Paying attention to empirical evidence that challenges subjective cultural beliefs about sex and risk has implications for labor economics, finance, and the economics of climate change.
    Date: 2012–09

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