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on Evolutionary Economics |
| By: | Abeler, Johannes (University of Oxford); Nosenzo, Daniele (University of Nottingham) |
| Abstract: | Laboratory experiments have become a wide-spread tool in economic research. Yet, there is still doubt about how well the results from lab experiments generalize to other settings. In this paper, we investigate the self-selection process of potential subjects into the subject pool. We alter the recruitment email sent to first-year students, either mentioning the monetary reward associated with participation in experiments; or appealing to the importance of helping research; or both. We find that the sign-up rate drops by two-thirds if we do not mention monetary rewards. Appealing to subjects' willingness to help research has no effect on sign-up. We then invite the so-recruited subjects to the laboratory to measure a range of preferences in incentivized experiments. We do not find any differences between the three groups. Our results show that student subjects participate in experiments foremost to earn money, and that it is therefore unlikely that this selection leads to an over-estimation of social preferences in the student population. |
| Keywords: | methodology, selection bias, laboratory experiment, field experiment, other-regarding behavior, social preferences, social approval, experimenter demand |
| JEL: | C90 D03 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7374&r=evo |
| By: | Julia Muller (Erasmus University Rotterdam); Christiane Schwieren (University of Heidelberg) |
| Abstract: | Growing interest in using personality variables in economic research leads to the question whether personality as measured by psychology is useful to predict economic behavior. Is it reasonable to expect values on personality scales to be predictive of behavior in economic games? It is undoubted that personality can influence large-scale economic outcomes. Whether personality variables can also be used to understand micro-behavior in economic games is however less clear. We discuss reasons in favor and against this assumption and test in our own experiment, whether and which personality factors are useful in predicting behavior in the trust or investment game. We can also use the trust game to understand how personality measures fare relatively in predicting behavior when situational constraints vary in strength. This approach can help economists to better understand what to expect from the inclusion of personality variables in their models and experiments, and where further research might be useful and needed. |
| Keywords: | Personality, Big Five, Five Factor Model, Incentives, Experiment, Trust Game |
| JEL: | C72 C91 D03 |
| Date: | 2012–03–26 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:2012028&r=evo |
| 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:2013043&r=evo |
| By: | Anita Kopanyi-Peuker (University of Amsterdam); Theo Offerman (University of Amsterdam); Randolph Sloof (University of Amsterdam) |
| Abstract: | We consider the possibility that cooperation in a prisoner's dilemma is fostered by people's voluntarily enhancement of their own vulnerability. The vulnerability of a player determines the effectiveness of possible punishment by the other. In the "Gradual" mechanism, players may condition their incremental enhancements of their vulnerability on the other's choices. In the "Leap" mechanism, they unconditionally choose their vulnerability. In our experiment, subjects only learn to cooperate when either one of these mechanisms is allowed. In agreement with theory, subjects aiming for cooperation choose higher vulnerability levels in Gradual than in Leap, which maps into higher mutual cooperation levels. |
| Keywords: | prisoner's dilemma, cooperation, endogenous punishment |
| JEL: | D03 D81 D83 |
| Date: | 2012–12–04 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:2012132&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:2013016&r=evo |
| By: | Eduard J. Bomhoff; Grace Lee Hooi Yean |
| Keywords: | social capital, general trust, in-trust/out-trust, civicness |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2013-04&r=evo |
| By: | Matthijs van Veelen (University of Amsterdam); Julian Garcia (Max-Planck-Institute for Evolutionary Biology) |
| Abstract: | We explore evolutionary dynamics for repeated games with small, but positive complexity costs. To understand the dynamics, we extend a folk theorem result by Cooper (1996) to continuation probabilities, or discount rates, smaller than 1. While this result delineates which payoffs can be supported by neutrally stable strategies, the only strategy that is evolutionarily stable, and has a uniform invasion barrier, is All D. However, with sufficiently small complexity costs, indirect invasions - but now through 'almost neutral' mutants - become an important ingredient of the dynamics. These indirect invasions include stepping stone paths out of full defection. |
| Keywords: | repeated games, evolutionary game theory, complexity costs, indirect invasions, robustness against indirect invasions, neutrally stable strategy, evolutionarily stable strategy, iterated prisoners dilemma |
| JEL: | C73 |
| Date: | 2012–09–06 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:2012089&r=evo |
| By: | Dai, Shuanping |
| Abstract: | Institutions are the equilibrium states of games, and the emergence of institutions is an evolutionary, stochastic, and (social) structural dependence process of interactions among agents. In this paper, we address the relationship between the institutional emergence and the structure of social interactions under the context of (network) coordination games. The model here shows when the agents are socially restricted, and individual decision-making is based on mutual agreements, inefficient institutions will be the stable states in the long run, say, institutions are locked-in inefficiently. When the agents are not restricted socially, the institutional stability will wander between two states. The efficient institutions can emerge only as the agents are facing strong cost constraints and, are in the contexts with relative high certainties, for instance, as the interactive population size is becoming smaller. |
| Keywords: | Institutional Emergence, Coordination Games, Stochastically Stable Equilibrium, Network Formation, Social Distance |
| JEL: | B15 B52 C73 |
| Date: | 2012–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:47011&r=evo |
| By: | Alesina, Alberto (Harvard University); Giuliano, Paola (University of California, Los Angeles) |
| Abstract: | We study the role of the most primitive institution in society: the family. Its organization and relationship between generations shape values formation, economic outcomes and influences national institutions. We use a measure of family ties, constructed from the World Values Survey, to review and extend the literature on the effect of family ties on economic behavior and economic attitudes. We show that strong family ties are negatively correlated with generalized trust; they imply more household production and less participation in the labor market of women, young adult and elderly. They are correlated with lower interest and participation in political activities and prefer labor market regulation and welfare systems based upon the family rather than the market or the government. Strong family ties may interfere with activities leading to faster growth, but they may provide relief from stress, support to family members and increased wellbeing. We argue that the value regarding the strength of family relationships are very persistent over time, more so than institutions like labor market regulation or welfare systems. |
| Keywords: | family values, cultural economics, labor market regulations, growth, institutions |
| JEL: | J2 J6 O4 O5 Z1 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7376&r=evo |
| By: | Howard Bodenhorn (Department of Economics, Clemson University); Timothy W. Guinnane (Department of Economics, Yale University); Thomas A. Mroz (Department of Economics, Clemson University) |
| Abstract: | An extensive literature uses anthropometric measures, typically heights, to draw inferences about living standards in the past. This literature's influence reaches beyond economic history; the results of historical heights research appear as crucial components in development economics and related fields. The historical heights literature often relies on micro-samples drawn from sub-populations that are themselves selected: examples include volunteer soldiers, prisoners, and runaway slaves, among others. Contributors to the heights literature sometimes acknowledge that their samples might not be random draws from the population cohorts in question, but rely on normality alone to correct for potential selection into the sample. We use a simple Roy model to show that selection cannot be resolved simply by augmenting truncated samples for left-tail shortfall. Statistical tests for departures from normality cannot detect selection in Monte Carlo exercises for small to moderate levels of self-selection, obviating a standard test for selection in the heights literature. We show strong evidence of selection using micro-data on the heights of British soldiers in the late eighteen and nineteenth centuries. Consequently, widely accepted results in the literature may not reflect variations in living standards during a soldier's formative years; observed heights could be predominantly determined by the process determining selection into the sample. A survey of the current historical heights literature illustrates the problem for the three most common sources: military personnel, slaves, and prisoners. |
| Keywords: | self-selection, selection bias, heights, anthropometrics, standards of living,industrialization puzzle, long-run economic growth |
| JEL: | I00 N3 O15 O47 C46 C52 C81 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:egc:wpaper:1023&r=evo |
| By: | Markus Pasche (School of Economics and Business Administration, Friedrich-Schiller-University Jena) |
| Abstract: | Behavioural economics attracted attention from environmental economists: it should help to understand why people do not respond to environmental policy measures, based on neoclassical assumptions, as predicted by theory. Moreover, understanding motives and driving forces behind pro-social, pro-environmental and cooperative behaviour should help to improve environmental policy design. The aim of this paper is a critical discussion of the way how this branch of research is interpreting the explanatory power and the normative (policy) implications of behavioural economics. |
| Keywords: | Behavioural economics, environmental economics, policy design, methodology |
| JEL: | B41 D0 D70 Q57 Q58 |
| Date: | 2013–05–08 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2013-020&r=evo |
| By: | Greif, Avner (Stanford University); Iyigun, Murat (University of Colorado, Boulder) |
| Abstract: | Although social institutions permeate the world in which we live, they are all but absent from our analyses of economic growth and development. This paper argues the need to mitigate this omission by demonstrating the importance of social institutions for growth and development. |
| Keywords: | economic development, institutions |
| JEL: | O10 N10 N13 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7377&r=evo |
| By: | Greif, Avner (Stanford University); Iyigun, Murat (University of Colorado, Boulder) |
| Abstract: | This paper examines the evolving effects of England's Old Poor Law (1601-1834). It establishes that poor relief reduced social unrest from around the late-17th century through the turn of the 19th century, at which point it began to spur population growth and its social stability effects dissipated. These conclusions are based on a new dataset encompassing 39 English counties from 1650 to 1815. It includes observations on the amount of poor relief offered, occurrences of food riots and other types of social unrest, population growth and a host of other variables. The paper first documents that county-level variations in poor relief had a statistically significant and quantitatively meaningful non-monotonic impact on population growth. Aid to the poor reduced population growth through the 1780s or 1820s when it began to exert significantly positive effects. Moreover, the Old Poor Law reduced food riots in the late-17th century and through most of the 18th century, but this effect dissipated in the early 19th century when poor relief began to generate population growth. Our analyses, thus, establish that the Old Poor Law fostered social order and stability for more than a century after which the Malthusian income effects dominated. |
| Keywords: | social institutions, Malthus, social stability, economic development |
| JEL: | N0 N33 O10 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7398&r=evo |