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on Evolutionary Economics |
| By: | Di Bartolomeo Giovanni; Papa Stefano |
| Abstract: | Our paper aims to investigate conditional and unconditional motivations in investment games by using a counterfactual methodology and attitudinal survey and self-reported information about participants’ behavior. We have combined different methodologies to verify the coherence between participants’ actions, beliefs and perceptions |
| Keywords: | Conditional and unconditional other-regarding preferences, triadic approach, investment game, frame effect |
| JEL: | D03 C91 D83 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:ter:wpaper:0099&r=evo |
| By: | Alger, Ingela (TSE (LERNA, CNRS) Univesité Toulouse 1 Capitole); Cox, Donald (Boston College) |
| Abstract: | What can evolutionary biology tell us about male-female differences in preferences concerning family matters? Might mothers be more solicitous toward offspring than fathers, for example? The economics literature has documented gender differences—children benefit more from money put in the hands of mothers rather than fathers, for example—and these differences are thought to be partly due to preferences. Yet for good reason family economics is mostly concerned with how prices and incomes affect behavior against a backdrop of exogenous preferences. Evolutionary biology complements this approach by treating preferences as the outcome of natural selection. We mine the well-developed biological literature to make a prima facie case for evolutionary roots of parental preferences. We consider the most rudimentary of traits—sex differences in gamete size and internal fertilization—and explain how they have been thought to generate malefemale differences in altruism toward children and other preferences related to family behavior. The evolutionary approach to the family illuminates connections between issues typically thought distinct in family economics, such as parental care and marriage markets. |
| Date: | 2012–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:tse:iastwp:26675&r=evo |
| By: | Gianandrea Staffiero (Universitat Pompeu Fabra, Department of Economics and Business); Filippos Exadaktylos (BELIS, Murat Sertel Center for Advanced Economic Studies, Istanbul Bilgi University); Antonio M. Espín (Department of Economic Theory and Economic History, University of Granada.) |
| Abstract: | The rejection of unfair proposals in ultimatum games is often quoted as evidence of other-regarding preferences. In this paper we focus on those responders who accept any proposals, setting the minimum acceptable offer (MAO) at zero. While this behavior could result from the randomization between the two payoff-maximizing strategies (i.e. setting MAO at zero or at the smallest positive amount), it also implies that the opponent’s payoff is maximized and the “pie” remains intact. We match subjects’ behavior as ultimatum responders with their choices in the dictator game, in two large-scale experiments. We find that those who set MAO at zero are the most generous dictators. Moreover, they differ substantially from responders whose MAO is the smallest positive offer, who are the greediest dictators. Thus, an interpretation of zero MAOs in terms of selfish, payoff-maximizing behavior could be misleading. Our evidence indicates that the restraint from punishing others can be driven by altruism and by the desire to maximize social welfare. |
| Keywords: | ultimatum game, dictator game, altruism, social welfare, costly punishment, selfishness, social preferences. |
| Date: | 2013–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:gra:wpaper:13/01&r=evo |
| By: | Tiziana Assenza (Catholic University of Milan); Peter Heemeijer (University of Amsterdam, and ABN AMRO); Cars Hommes (University of Amsterdam); Domenico Massaro (University of Amsterdam) |
| Abstract: | The way in which individual expectations shape aggregate macroeconomic variables is crucial for the transmission and effectiveness of monetary policy. We study the individual expectations formation process and the interaction with monetary policy, within a standard New Keynesian model, by means of laboratory experiments with human subjects. Three aggregate outcomes are observed: convergence to some equilibrium level, persistent oscillatory behavior and oscillatory convergence. We fit a heterogeneous expectations model with a performance-based evolutionary selection among heterogeneous forecasting heuristics to the experimental data. A simple heterogeneous expectations switching model fits individual learning as well as aggregate macro behavior and outperforms homogeneous expectations benchmarks. Moreover, in accordance to theoretical results in the literature on monetary policy, we find that an interest rate rule that reacts more than point for point to inflation has some stabilizing effects on inflation in our experimental economies, although convergence can be slow in presence of evolutionary learning. |
| Keywords: | Experiments; New Keynesian Macro Model; Monetary Policy; Expectations; Heterogeneity |
| JEL: | C91 C92 D84 E52 |
| Date: | 2013–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20130016&r=evo |
| By: | Leonid A. Shapiro |
| Abstract: | Behavior of systems that are functions of anticipated behavior of other systems, whose own behavior is also anticipatory but homeostatic and determined by hierarchical ordering, which changes over time, of sets of possible environments that are not co-possible, is proven to be highly non-linear and sensitively dependent on precise parameters. Averages and other kinds of aggregates cannot be calculated for sets of measurements of behavior of systems, defined in this essay, that are "index complex" in this way. This includes many systems, for instance, social behavior, where anticipation of behavior of other individuals plays a central role. Analysis by way of generalized functions of complex variables is done for these kinds of systems, and equations of change of state are formally described. Behavior that comprises of responses to market interest rates is taken for example. |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1301.4207&r=evo |
| By: | Adriana Cornea (University of Exeter); Cars Hommes (University of Amsterdam); Domenico Massaro (University of Amsterdam) |
| Abstract: | In this paper we develop and estimate a behavioral model of inflation dynamics with monopolistic competition, staggered price setting and heterogeneous firms. In our stylized framework there are two groups of price setters, fundamentalists and naive. Fundamentalists are forward-looking in the sense that they believe in a present-value relationship between inflation and real marginal costs, while naive are backward-looking, using the simplest rule of thumb, naive expectations, to forecast future inflation. Agents are allowed to switch between these different forecasting strategies conditional on their recent relative forecasting performance. The estimation results support behavioral heterogeneity and the evolutionary switching mechanism. We show that there is substantial time variation in the weights of forward-looking and backward-looking behavior. Although on average the majority of firms use the simple backward-looking rule, the market has phases in which it is dominated by either the fundamentalists or the naive agents. |
| Keywords: | Inflation; Phillips Curve; Heterogeneous Expectations; Evolutionary Selection |
| JEL: | E31 E52 C22 |
| Date: | 2013–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20130015&r=evo |
| By: | Alain Cohn; Ernst Fehr; Lorenz Goette |
| Abstract: | The presence of workers who reciprocate higher wages with greater effort can have important consequences for labor markets. Knowledge about the determinants of reciprocal effort choices is, however, incomplete. We investigate the role of fairness perceptions and social preferences in workers’ performance in a field experiment in which workers were hired for a one-time job. We show that workers who perceive being underpaid at the base wage increase their performance if the hourly wage increases, while those who feel adequately paid or overpaid at the base wage do not change their performance. Moreover, we find that only workers who display positive reciprocity in a lab experiment show reciprocal performance responses in the field, while workers who lack positive reciprocity in the lab do not respond to the wage increase even if they feel underpaid at the base wage. Our findings suggest that fairness perceptions and social preferences are key in workers’ performance response to a wage increase. They are the first direct evidence of the fair-wage effort hypothesis in the field and also help interpret previous contradictory findings in the literature. |
| Keywords: | Fairness perception, positive reciprocity, field experiment, wage increase |
| JEL: | C93 J31 M52 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:107&r=evo |
| By: | Alexander Moradi, Gareth Austin and Jorg Baten |
| Abstract: | While Ghana is a classic case of economic growth in an agriculturalâ€export colony, scholars have queried whether it was sustained, and how far its benefits were widely distributed, socially and regionally. Using height as a measure of human wellâ€being we explore the evolution of living standards and regional inequality in Ghana from 1870 to 1980. Our findings suggest that, overall, living standards improved during colonial times and that a trend reversal occurred during the economic crisis in the 1973â€83. In a regression analysis we test several covariates reflecting the major economic and social changes that took place in early twentiethâ€century Ghana including railway construction, cocoa production, missionary activities, and urbanization. We find significant height gains in cocoa producing areas, whereas heights decreased with urbanization. |
| Keywords: | Nutrition, health, anthropometrics, colonial, living standards |
| JEL: | I30 I32 N37 O10 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:325&r=evo |
| By: | Björn Bartling; Ernst Fehr; Klaus M. Schmidt |
| Abstract: | Employment contracts give a principal the authority to decide flexibly which task his agent should execute. However, there is a tradeoff, first pointed out by Simon (1951), between flexibility and employer moral hazard. An employment contract allows the principal to adjust the task quickly to the realization of the state of the world, but he may also abuse this flexibility to exploit the agent. We capture this tradeoff in an experimental design and show that principals exhibit a strong preference for the employment contract. However, selfish principals exploit agents in one-shot interactions, inducing them to resist entering into employment contracts. This resistance to employment contracts vanishes if fairness preferences in combination with reputation opportunities keep principals from abusing their power, leading to the widespread, endogenous formation of efficient long-run employment relations. Our results inform the theory of the firm by showing how behavioral forces shape an important transaction cost of integration – the abuse of authority – and by providing an empirical basis for assessing differences between the Marxian and the Coasian view of the firm, as well as Alchian and Demsetz’s (1972) critique of the Coasian approach. |
| Keywords: | Theory of the firm, transaction cost economics, authority, power abuse, employment relation, fairness, reputation |
| JEL: | C91 D23 D86 M5 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:098&r=evo |
| By: | Cars Hommes (University of Amsterdam); Mei Zhu (Shanghai University of Finance and Economics) |
| Abstract: | We propose behavioral learning equilibria as a plausible explanation of coordination of individual expectations and aggregate phenomena such as excess volatility in stock prices and high persistence in inflation. Boundedly rational agents use a simple univariate linear forecasting rule and correctly forecast the unconditional sample mean and first-order sample autocorrelation. In the long run, agents learn the best univariate linear forecasting rule, without fully recognizing the structure of the economy. The simplicity of behavioral learning equilibria makes coordination of individual expectations on such an aggregate outcome more likely. In a first application, an asset pricing model with AR(1) dividends, a unique behavioral learning equilibrium exists characterized by high persistence and excess volatility, and it is stable under learning. In a second application, the New Keynesian Phillips curve, multiple equilibria co-exist, learning exhibits path dep endence and inflation may switch between low and high persistence regimes. |
| Keywords: | Bounded rationality; Stochastic consistent expectations equilibrium; Adaptive learning; Excess volatility; Inflation persistence |
| JEL: | E30 C62 D83 D84 |
| Date: | 2013–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20130014&r=evo |
| By: | Kosse, Fabian; Pfeiffer, Friedhelm |
| Abstract: | This study explores the intergenerational transmission of time preferences and focuses on the question which specific aspects of mother's time preference are related to her preschool child's ability to delay gratification. We provide a new procedure for assessing the parameters of a 'quasi-hyperbolic' discount function (Laibson, 1997) using two trade-off experiments. We apply the procedure to a sample of 213 mother-child pairs and show that especially mother's beta parameter is related to her preschool child's ability to delay gratification. -- |
| Keywords: | Intergenerational Transmission,Time Preference,Quasi-Hyperbolic Discounting,Preschool Children |
| JEL: | D90 D10 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:13002&r=evo |
| By: | Alex Dickson (Department of Economics, University of Strathclyde); Colin Jennings (Department of Economics, University of Strathclyde); Gary Koop (Department of Economics, University of Strathclyde) |
| Abstract: | Much research suggests that sporting events can trigger domestic violence with recent evidence suggesting that pre-match expectations (which can be interpreted as reference points) play an especially important role in this relationship. In particular, unexpectedly disappointing results have been associated with large increases in domestic violence. This paper contributes to this literature using a new data set containing every domestic violence incident in Glasgow over a period of more than eight years. We find that Old Firm matches, where Glasgow rivals Celtic and Rangers play, are associated with large increases in domestic violence (regardless of the timing or the outcome of the match). Non-Old Firm matches tend to have little impact on domestic violence. Furthermore, we find little evidence for the importance of reference points. Matches with disappointing outcomes, relative to pre-match expectations, are found to be associated with unusual increases in domestic violence only in a very limited set of matches. |
| Keywords: | domestic abuse; Scottish football; Old Firm; reference points; loss aversion |
| JEL: | D03 J12 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:str:wpaper:1301&r=evo |
| By: | Fabio Tramontana (Department of Economics and Management, University of Pavia) |
| Abstract: | We analyze the consequences of the presence of imitators in a financial market populated by boundedly rational speculators. We consider imitators that only look at the recent success of the available trading rules. We show that the introduction of this kind of imitators makes the results more complicated but even more realistic. In particular, under some specific circumstances, imitators may stabilize an otherwise unstable market or, at the opposite, make unstable an otherwise stable scenario. |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:pav:demwpp:029&r=evo |
| By: | Farre, Lidia |
| Abstract: | This paper is a critical review of the literature on the issue of how male behavior affects female outcomes in the promotion of gender equality. It employs the family as the main unit of analysis because a large part of gender interactions occurs within this institution. This survey first summarizes recent studies on the distribution of power within the family and identifies several factors that have altered the bargaining position of men and women over the last decades. It then reviews empirical work on the contribution of men, as fathers and husbands, to the health and socioeconomic outcomes of women in both developed and developing countries. Finally, it discusses a set of economic policies that have intentionally or unintentionally affected men's attitudes and behaviors. The main implication is that policies meant to achieve gender equality should focus on men rather than exclusively target women. |
| Keywords: | Population Policies,Gender and Development,Gender and Law,Gender and Health,Health Monitoring&Evaluation |
| Date: | 2013–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6323&r=evo |
| By: | Jun, Bogang |
| Abstract: | Unified Growth Theory suggests the demographic transition and the associated rise in human capital formation were critical forces in the transition from Malthusian stagnation to modern economic growth. This paper provides empirical evidence in support of this hypothesis based on the development process in Korea. Exploiting variations in fertility in human capital formation across regions in Korea over the period 1970 to 2010, the study establishes that the process of development in Korea was associated with a reduction in child quantity and increase child quality. |
| Keywords: | Demographic transition; Quantity-quality trade-off; Unified Growth Theory |
| JEL: | J13 N15 I25 |
| Date: | 2013–01–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:43971&r=evo |
| By: | Alberto Alesina (Harvard University and IGIER Bocconi); Johann Harnoss (EQUIPPE, University of Lille, Harvard University and HWWI Hamburg); Hillel Rapoport (Bar-Ilan University, EQUIPPE and Center for International Development, Harvard University) |
| Abstract: | The diversity of people has economic costs and benefits. Using recent immigration data from 195 countries, we propose an index of diversity based on people's birthplaces. This new index is decomposed into a "size" (share of foreign born) and a "variety" (diversity of immigrants) component and is available for 1990 and 2000 and for the overall as well as for the high (workers with college education) and low-skill fractions of the workforce. We show that birthplace diversity is largely uncorrelated with ethnic and linguistic fractionalization and that - unlike fractionalization - it is positively related to economic development even after controlling for education, institutions, ethnic and linguistic fractionalization, trade openness, geography, market size, and origin-effects. This positive association appears particularly strong for the diversity of skilled immigrants in richer countries. We make progress towards addressing endogeneity by specifying a gravity model to predict the diversity of immigration based on exogenous bilateral variables. The results are robust across various OLS and 2SLS specifications. |
| Keywords: | Birthplace diversity, ethnic diversity, economic growth, productivity, immigration. |
| JEL: | O1 O4 F22 F43 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:1304&r=evo |
| By: | Mo, Pak-Hung |
| Abstract: | We find an undiscovered effect of geography on the choices of writing system in ancient civilizations that in turn drive their courses of historical evolution. The fates of the ancient civilizations were predetermined by the causation spirals generated by the writing system chosen by their ancient ancestors. Understanding the mechanism can enlighten our present political choices that in turn determine the future course of humankind evolution. It can also inspire us about the clue to build an inclusive global society that can integrate the cumulative knowledge, ideas and technology of the diverse speech-communities in the world for a better quality of living for all. |
| Keywords: | Geography; Writing System; Historical Evolution |
| JEL: | O11 O43 O29 O57 N4 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:43826&r=evo |