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on Evolutionary Economics |
| By: | Jona Linde (University of Amsterdam); Joep Sonnemans (University of Amsterdam); Jan Tuinstra (University of Amsterdam) |
| Abstract: | Minority games are a stylized description of strategic situations with both coordination and competition. These games are widely studied using either simulations or laboratory experiments. Simulations can show the dynamics of aggregate behavior, but the results of such simulations depend on the type of strategies used. So far experiments provided little guidance on the type of strategies people use because the set of possible strategies is very large. We therefore use a multi-round strategy method experiment to directly elicit people's strategies. Between rounds participants can adjust their strategy and test the performance of (possible) new strategies against strategies from the previous round. Strategies gathered in the experiment are subjected to an evolutionary competition. The strategies people use are very heterogeneous although aggregate outcomes resemble the symmetric Nash equilibrium. The strategies that survive evolutionary competition achieve much higher levels of coordination. |
| Keywords: | minority game; strategy experiment; evolution; simulation |
| JEL: | C63 C72 C91 D03 |
| Date: | 2013–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20130043&r=evo |
| By: | Dariel A. (GSBE) |
| Abstract: | This paper presents the results from an experiment investigating whether framing affects the elicitation and predictive power of preferences for cooperation, i.e., the willingness to cooperate with others. Cooperation preferences are elicited in three treatments using the method of Fischbacher, Gächter and Fehr (2001). The treatments vary two features of their method: the sequence and order in which the contributions of other group members are presented. The predictive power of the elicited preferences is evaluated in a one-shot and a finitely-repeated public-good game. I find that the order in which the contributions of others are presented, by and large, has no impact on the elicited preferences and their predictive power. In contrast, presenting the contributions of others in a sequence has a pronounced effect on the elicited preferences and reduces substantially their predictive power. Overall, elicited preferences are more accurate at predicting behavior when others contributions are presented simultaneously and in ascending order, like in Fischbacher, Gächter and Fehr (2001). |
| Keywords: | Design of Experiments: Laboratory, Individual; |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umagsb:2013010&r=evo |
| By: | Marco Castillo (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University); Gregory Leo (Department of Economics, University of California, Santa Barbara); Ragan Petrie (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University) |
| Abstract: | We present clean evidence of a direct social context effect on behavior in a laboratory experiment: the gender composition of the room significantly alters the risk decisions of subjects even when the actions or presence of others are neither payoff nor information relevant. Our design is such that subjects do not know the decisions of others, nor can they be inferred. We find that women become more risk taking as the proportion of men in the group increases. This is most consistent with women imitating the expected behavior of others in the session. Our results imply that aggregate behavior is not a simple extrapolation of individual preferences. Groups might have more extreme behavior than the average individual. Length: 27 |
| Keywords: | gender, context effect, risk aversion, experiment |
| JEL: | C91 D81 J16 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:gms:wpaper:1040&r=evo |
| By: | Pahlke, Julius; Strasser, Sebastian; Vieider, Ferdinand M. |
| Abstract: | We explore situations in which a decision-maker bears responsibility for somebody else's outcomes as well as for her own. For gains we confirm the intuition that being responsible for somebody else's payoffs increases risk aversion, while in the loss domain we find increased risk seeking. In a second experiment we replicate the finding of increased risk aversion for large probabilities of a gain, while for small probability gains we find an increase of risk seeking under conditions of responsibility. This discredits hypotheses of a cautious shift under responsibility, and indicates an accentuation of the fourfold pattern of risk attitudes usually found for individual choices. -- |
| Keywords: | risk attitude,prospect theory,social norms,responsibility,other-regarding preferences |
| JEL: | D03 D81 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbrad:spii2012402&r=evo |
| By: | Michael A. Kuhn (Department of Economics, University of California San Diego, 9500 Gilman Drive # 0508, La Jolla, CA 92093); Peter Kuhn (Department of Economics, University of California Santa Barbara, 2127 North Hall, Santa Barbara, CA 93106-9210, USA); Marie Claire Villeval (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France) |
| Abstract: | We experimentally manipulate two aspects of the cognitive environment — cognitive depletion and recent sugar intake — and estimate their effects on individuals’ time preferences in a way that allows us to identify the structural parameters of a simple (α,β,δ) intertemporal utility function for each person. We find that individuals exposed to a prior cognitive load, individuals who consumed a sugared drink and individuals who consumed a sugar-free drink all defer more income than a control group exposed to none of these conditions. Structural estimates show that all three effects are driven entirely by increases in the intertemporal substitution elasticity parameter (α). Together, our results suggest that at least for complex economic decisions like intertemporal financial choice, the ‘attention/focusing’ effect of both prior cognitively demanding activity and prior assignment of a primary reward can improve decision-making. |
| Keywords: | Time preferences, self-control, depletion, sucrose, experiment |
| JEL: | C91 D90 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1316&r=evo |
| By: | Heineck, Guido; Süssmuth, Bernd |
| Abstract: | What are the long-term effects of Communism on economically relevant notions such as social trust, fairness, and scope of cooperation? To answer this question, we study the post-unification trajectory of convergence between East and West German individuals with regard to trust, cooperation, and risk. Our hypotheses are derived from a model of German unification that incorporates individual responses both to incentives and to values inherited from earlier generations as recently suggested in the literature. Using two waves of balanced panel data, we find that despite twenty years of unification East Germans are still characterized by a persistent level of social distrust. In comparison to West Germans, they are less inclined to see others as cooperative. East Germans are also found to have been more risk loving than West Germans. However, risk attitudes fully converged recently. -- |
| Keywords: | Social trust,Risk Attitudes,Political Regimes,German Unification |
| JEL: | P51 Z13 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:leiwps:118&r=evo |
| By: | Konrad, Kai A.; Lohse, Tim; Qari, Salmai |
| Abstract: | We consider a lie-catching experiment with 9240 judgements. A set of videotapes shows subjects participating in a tax compliance experiment. The subjects chose whether or not to misreport. Subjects knew that underreporters were chosen for an audit with some probability. An audit led to detection and to a punishment fee. This compliance framework induced only persons with high deceptive abilities to underreport and, so, caused self-selection. Among the students who judged these videos, we find that the deception detection rate was significantly below 50 percent and even lower if the self-selection pressure in the tax compliance experiment was higher. This suggests that, when subjects can choose whether to state the truth or to lie, there is a self-selection effect by which individuals with higher deceptive ability are more likely to lie. |
| Keywords: | Decision making; Interpersonal interaction; Judgment; Perception |
| JEL: | D83 H26 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9384&r=evo |
| By: | Sacks, Daniel W.; Stevenson, Betsey; Wolfers, Justin |
| Abstract: | In recent decades economists have turned their attention to data that asks people how happy or satisfied they are with their lives. Much of the early research concluded that the role of income in determining well-being was limited, and that only income relative to others was related to well-being. In this paper, we review the evidence to assess the importance of absolute and relative income in determining well-being. Our research suggests that absolute income plays a major role in determining well-being and that national comparisons offer little evidence to support theories of relative income. We find that well-being rises with income, whether we compare people in a single country and year, whether we look across countries, or whether we look at economic growth for a given country. Through these comparisons we show that richer people report higher well-being than poorer people; that people in richer countries, on average, experience greater well-being than people in poorer countries; and that economic growth and growth in well-being are clearly related. Moreover, the data show no evidence for a satiation point above which income and well-being are no longer related. |
| Keywords: | adaptation; Easterlin paradox; economic growth; life satisfaction; quality of life; subjective well-being |
| JEL: | D6 I3 J1 O1 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9280&r=evo |
| By: | Matt Van Essen (Department of Economics, Finance, and Legal Studies, University of Alabama); John Wooders (Economics Discipline Group, University of Technology, Sydney) |
| Abstract: | We explore the role of experience in mixed-strategy games by comparing, for a stylized version of Texas Hold-em, the behavior of experts, who have extensive experience playing poker online, to the behavior of novices. We find significant differences. The initial frequencies with which players bet and call are closer to equilibrium for experts than novices. And, while the betting and calling frequencies of both types of subjects exhibit too much heterogeneity to be consistent with equilibrium play, the frequencies of experts exhibit less heterogeneity. We find evidence that the style of online play transfers from the field to the lab. |
| Keywords: | mixed-strategy Nash equilibrium; minimax; poker; experiment; expertise |
| JEL: | C72 C92 C93 D03 |
| Date: | 2013–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:uts:ecowps:6&r=evo |
| By: | Uwe Dulleck (QUT); Jonas Fooken (QUT); Cameron Newton (QUT); Andrea Ristl; Markus Schaffner (QUT); Benno Torgler (QUT) |
| Abstract: | Although paying taxes is a key element in a well-functioning civilized society, the understanding of why people pay taxes is still limited. What current evidence shows is that, given relatively low audit probabilities and penalties in case of tax evasion, compliance levels are higher than would be predicted by traditional economics-of-crime models. Models emphasizing that taxpayers make strategic, financially motivated compliance decisions, seemingly assume an overly restrictive view of human nature. Law abidance may be more accurately explained by social norms, a concept that has gained growing importance as a facet in better understanding the tax compliance puzzle. This study analyzes the relation between psychic cost arising from breaking social norms and tax compliance using a heart rate variability (HRV) measure that captures the psychobiological or neural equivalents of psychic costs (e.g., feelings of guilt or shame) that may arise from the contemplation of real or imagined actions and produce immediate consequential physiologic discomfort. Specifically, this nonintrusive HRV measurement method obtains information on activity in two branches of the autonomous nervous system (ANS), the excitatory sympathetic nervous system and the inhibitory parasympathetic system. Using time-frequency analysis of the (interpolated) heart rate signal, it identifies the level of activity (power) at different velocities of change (frequencies), whose LF (low frequency) to HF (high frequency band) ratio can be used as an index of sympathovagal balance or psychic stress. Our results, based on a large set of observations in a laboratory setting, provide empirical evidence of a positive correlation between psychic stress and tax compliance and thus underscore the importance of moral sentiment in the tax compliance context. |
| Keywords: | tax compliance, psychic costs, stress, tax morale, cooperation, heart rate variability, biomarkers, experiment |
| JEL: | H26 H41 K42 D31 D63 C91 |
| Date: | 2012–11–07 |
| URL: | http://d.repec.org/n?u=RePEc:qut:qubewp:wp001&r=evo |
| By: | Leonardo Becchetti (University of Rome "Tor Vergata"); Luisa Corrado (University of Rome "Tor Vergata"); Pierluigi Conzo (University of Turin) |
| Abstract: | We provide non experimental evidence of the relevance of sociability on subjective wellbeing by investigating the determinants of life satisfaction on a large sample of Europeans aged above 50. We document that voluntary work, religious attendance, helping friends/neighbours and participation to community-related organizations affect positively and significantly life satisfaction. We illustrate the different impact that some sociability variables have on eudaimonic versus cognitive measures of subjective wellbeing. Our empirical findings discriminate among other regarding and self-regarding preferences as rationales explaining such behaviour. We document that different combinations between actions and motivations have different impact on life satisfaction thereby providing support for the relevance of these specific “contingent goods” and to the literature of procedural utility. Our findings are confirmed in robustness checks including refinements of the dependent variable, instrumental variables and sensitivity analysis on departures from the exogeneity assumption. |
| Keywords: | sociability, altruism, other-regarding activities, other regarding motivations, life satisfaction, subjective well-being. |
| JEL: | A13 D13 D64 |
| Date: | 2013–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:270&r=evo |
| By: | Jonathan E. Alevy (Department of Economics, University of Alaska Anchorage); Michael K. Price (Department of Economics, Georgia State University) |
| Abstract: | A burgeoning literature in the neurosciences suggests that individuals modify their behavior not only in response to their own experiences, but also from what they learn about the experiences of others engaged in similar tasks. Importantly, these different forms of learning are associated with common neurological processes. We explore whether others’ advice provides a fictive learning signal that substitutes for one’s own experience. We examine this question in an environment where inexperienced traders frequently perform poorly – an experimental asset market. Prices in sessions with advice tend towards fundamentals mitigating the severity of price bubbles. Further, advice allays behaviors shown to yield bubbles in prior studies. Taken jointly, our data suggest that advice triggers fictive learning which helps agents avoid the “mistakes” made by naïve counterparts. |
| Keywords: | asset pricing, laboratory experiments, advice |
| JEL: | C92 D83 G12 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:ala:wpaper:2012-07&r=evo |
| By: | Dalgaard, Carl-Johan; Strulik, Holger |
| Abstract: | Unified growth theory predicts that the timing of the fertility transition is a key determinant of contemporary comparative development, as it marks the onset of the take-off to sustained growth. Neoclassical growth theory presupposes a take-off, and explains comparative development by variations in (subsequent) investment rates. The present analysis integrates these two perspectives empirically, and shows that they together constitute a powerful predictive tool vis-a-vis contemporary income differences. -- |
| Keywords: | comparative development,unified growth theory,neoclassical growth theory |
| JEL: | O11 O57 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:151&r=evo |