nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2013‒05‒22
eleven papers chosen by
Matthew Baker
City University of New York

  1. Norms Make Preferences Social By Erik O. Kimbrough; Alexander Vostroknutov
  2. Sustaining Group Reputation. By Erik O. Kimbrough; Jared Rubin
  3. Punishment Mechanisms and their Effect on Cooperation - A Simulation Study By M. D. Farjam; M. Faillo; W.F.G. Haselager; I.G. Sprinkhuizen-Kuyper
  4. The decentralization of punishments in experiments with public goods By Zuzana Berná; Jiøí Špalek
  5. What niche did human cooperativeness evolve in? By Hannes Rusch
  6. Two Studies on the Interplay between Social Preferences and Individual Biological Features. By Santiago Sanchez-Pages (University of Barcelona, University of Edinburgh)
  7. Revisiting the Antisocial Punishment across Societies Experiment By Pablo Lucas; Issam Malki
  8. What Determines Trust? Human Capital vs. Social Institutions : Evidence from Manila and Moscow By John V.C. Nye; Grigory Androuschak; Desirée Desierto; Garett Jones; Maria Yudkevich
  9. Reconciling behavioural and neoclassical economics By Guilhem Lecouteux
  10. Creative industries from an evolutionary perspective: A critical literature review By Jürgen Essletzbichler
  11. Path dependence, place dependence, and the evolution of a patchwork economy: Evidence from Western Australia, 1981-2008 By Paul Plummer; Matthew Tonts

  1. By: Erik O. Kimbrough (Simon Fraser Unviersity); Alexander Vostroknutov (SMaastricht University)
    Abstract: We develop a unifying explanation for prosocial behavior. We argue that people care not about others’ payoffs per se, but whether their own behavior accords with social norms. Individuals who are sensitive to norms will adhere to them so long as they observe others doing the same. A model formalizing this generates both prosociality (without relying on explicit distributional preferences) and well-known context effects (for which distributional preferences cannot account). A simple experiment allows us to measure individual-level normsensitivity and to show that norm-sensitivity explains heterogeneity in prosociality in public goods, dictator, ultimatum, and trust games.
    Keywords: experimental economics, norms, social preferences, reciprocity
    JEL: C91 C92 D03
    Date: 2013–05
  2. By: Erik O. Kimbrough (Simon Fraser University); Jared Rubin (Chapman University)
    Abstract: When individuals trade with strangers, there is a temptation to renege on contracts. In the absence of repeated interaction or exogenous enforcement mechanisms, this problem can impede valuable exchange. Historically, individuals have solved this problem by forming institutions that sustain trade using group, rather than individual, reputation. Groups can employ two mechanisms to uphold reputation that are generally unavailable to isolated individuals: information sharing and in-group punishment. In this paper, we design a laboratory experiment to distinguish the roles of these two mechanisms in sustaining group reputation and increasing gains from trade. We find that information sharing encourages path dependence via group reputation; good (bad) behavior by individuals results in greater (fewer) gains from exchange for the group in the future. However, the mere threat of in-group punishment is enough to discourage bad behavior, even if punishment is rarely employed. When combined, information sharing and in-group punishment work as complements; the presence of in-group punishment encourages cooperation early on, and information sharing reinforces this behavior over time.
    Keywords: Experimental Economics, Group Reputation, Information, Group Punishment, Gains from Trade, Trust Game, Juries
    JEL: C9 D02 D7 Q2
    Date: 2013
  3. By: M. D. Farjam; M. Faillo; W.F.G. Haselager; I.G. Sprinkhuizen-Kuyper
    Abstract: In social dilemmas punishment costs resources, not just from the one who is punished but often also from the punisher and society. Reciprocity on the other side is known to lead to cooperation without the costs of punishment. The question at hand is whether punishment besides its costs brings advantages and how its negative side-effects can be reduced to a minimum in an environment populated by reciprocal agents. Various punishment mechanisms have been studied in the economic literature such as unrestricted punishment, legitimate punishment, cooperative punishment, and the hired gun mechanism. All these mechanisms are implemented in a simulation where agents can share resources and may decide to punish other agents when they do not share. Through evolutionary learning agents adapt their sharing/punishing policy. Despite the costs of punishment, legitimate punishment compared to no-punishment increased performance when the availability of resources was low. When the availability was high, performance was better in no-punishment conditions with indirect reciprocity. Furthermore the hired gun mechanism worked only as good as other punishment mechanisms when the availability of resources was high. Legitimate punishment leads to a higher performance than unrestricted punishment. Summarized, this paper shows that a well-chosen punishment mechanism can play a facilitating role for cooperation even if the cooperating system already adopted reciprocity.
    Keywords: Public Goods Games, Punishment, Cooperation, Reciprocity, Evolution of Cooperation
    Date: 2013
  4. By: Zuzana Berná; Jiøí Špalek (Department of Public Economics, Masaryk University)
    Abstract: This paper deals with the effects of introducing adequate punishment opportunities in experiments with public goods. Decentralized punishment means that the contributing subjects have a possibility to sanction free riders without the intervention of an external authority. The very first experiments demonstrated a significantly positive effect of a punishment opportunity on enhancing cooperation in situations of social dilemma. Following studies, however, pointed at limited effectiveness of this mechanism. The first part of the paper summarizes selected literature on the topic and presents its principal findings. The second part is dedicated to the presentation of the results of an experimental series on decentralized punishment realized in the Czech Republic. The last part introduces possible questions and topics which may be subject of future research within this area.
    Keywords: economic experiment, cooperation, public goods, decentralized punishment, partner and stranger matching
    JEL: C92 D70 H41
    Date: 2012–12
  5. By: Hannes Rusch
    Abstract: The Prisoner’s Dilemma (PD) is widely used to model social interaction between un- related individuals in the study of the evolution of cooperative behaviour in humans and other species. Many effective mechanisms and promotive scenarios have been studied which allow for small founding groups of cooperative individuals to prevail even when all social interaction is characterised as a PD. Here, a brief critical discusion of the role of the PD as the most prominent tool in cooperation research is presented, followed by two new objections to such an exclusive focus on PD-based models of social interaction. It is highlighted that only 2 of the 726 combinatorially possible strategically unique ordinal 2x2 games have the detrimental characteristics of a PD and that the frequency of PD-type games in a space of games with random payoffs does not exceed about 3.5%. Although these purely mathematical considerations do not compellingly imply that the relevance of PDs is overestimated, it is proposed that, in the absence of convergent empirical information about the ancestral human social niche, this finding can be interpreted in favour of a so far rather neglected answer to the question of how the founding groups of human cooperation themselves came to cooperate: Behavioural and/or psychological mechanisms which evolved for other, possibly more frequent, social interaction situations might have been applied to PD- type dilemmas only later. Human cooperative behaviour might thus partly have begun as a cooptation.
    Keywords: cooperation, prisoner’s dilemma, cooptation, social niche, human evolution
    JEL: C73 D74 D79
    Date: 2013
  6. By: Santiago Sanchez-Pages (University of Barcelona, University of Edinburgh)
    Abstract: Biological features and social preferences have been studied separately as factors influencing human strategic behaviour. We run two studies in order to explore the interplay between these two sets of factors. In the first study, we investigate to what extent social preferences may have some biological underpinnings. We use simple one-shot distribution experiments to attribute subjects one out of four types of social preferences: Self-interested (SI), Competitive (C), Inequality averse (IA) and Efficiency-seeking (ES). We then investigate whether these four groups display differences in their levels of facial Fluctuating Asymmetry (FA) and in proxies for exposure to testosterone during phoetal development and puberty. We observe that development-related biological features and social preferences are relatively independent. In the second study, we compare the relative weight of these two set of factors by studying how they affect subjects’ behaviour in the Ultimatum Game (UG). We find differences in offers made and rejection rates across the four social preference groups. The effect of social preferences is stronger than the effect of biological features even though the latter is significant. We also report a novel link between facial masculinity (a proxy for exposure to testosterone during puberty) and rejection rates in the UG. Our results suggest that biological features influence behaviour both directly and through their relation with the type of social preferences that individuals hold.
    Keywords: Testosterone; Ultimatum Game; Fluctuating Asymmetry; Facial masculinity;2D:4D; Social preferences.
    Date: 2013–03–29
  7. By: Pablo Lucas (Geary Institute, University College Dublin, Ireland and Maastricht School of Management, The Netherlands); Issam Malki (Sheffield Hallam University, Department of Economics, England)
    Abstract: This paper presents an alternative interpretation of an experimental public goods game dataset, particularly on the understanding of the observed antisocial behaviour phenomenon between subjects around the world. The anonymous nature of contributions and punishments are taken into account to reinterpret the experimental results by analysing dynamic behaviour in terms of mean contributions across societies and their association with antisocial punishment. Thus, by also taking into account the heterogeneity between the experimented cities, the analysis contrasts with the interpretation of one trend across cities, as the findings indicate two opposite trends in differentgroups of cities.
    Keywords: Behavioural economics, experimental public goods, game dataset
    JEL: D03
    Date: 2013–05–15
  8. By: John V.C. Nye (Department of Economics, George Mason University and Laboratory for Institutional Analysis of Economic Reforms, Higher School of Economics, Moscow); Grigory Androuschak (Laboratory for Institutional Analysis of Economic Reforms, Higher School of Economics, Moscow); Desirée Desierto (School of Economics, University of the Philippines Diliman); Garett Jones (Department of Economics, George Mason University); Maria Yudkevich (Laboratory for Institutional Analysis of Economic Reforms, Higher School of Economics, Moscow)
    Abstract: It is now well established that highly developed countries tend to score well on measures of social capital and have higher levels of generalized trust. In turn, the willingness to trust has been shown to be correlated with various social and environmental factors (e.g. institutions, culture) on one hand, and accumulated human capital on the other. To what extent is an individual’s trust driven by contemporaneous institutions and environmental conditions and to what extent is it determined by the individual’s human capital? We collect data from students in Moscow and Manila and use the variation in their height and gender to instrument for measures of their human capital to identify the causal effect of the latter on trust. We find that human capital positively affects the propensity to trust, and its contribution appears larger than the combined effect of other omitted variables including, plausibly, social and environmental factors.
    Date: 2012–11
  9. By: Guilhem Lecouteux (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X)
    Abstract: The representation of the individual in economics as a rational homo oeconomicus had been seriously questioned by the development of behavioural economics. Some authors nevertheless argue that economists do not need to produce complex models of human behaviour, since such investigation does not fall within the scope of economic analysis. We show that the mere definition of the scope of economic analysis is quite ambiguous, between on the one hand a conception of economics as a science of individual choice and on the other hand as a science of social institutions: this duality finds its origins during the marginalist revolution with Jevons, Menger and Walras, whose theories seem to be in conflict concerning the scope of economic analysis and the definition of the "economic man". Economists then produced two distinct models of this economic man, one as the simplification of a real individual, and the other as a representative agent. The figure of the homo oeconomicus developed later by Pareto homogenized these two traditions, leading to the indeterminacy of the scope of economic analysis and in fine to the development of behavioural economics. Since behavioural and neoclassical economics are the continuation of these two distinct traditions, we stress that they should be considered as complementary rather than substitute approaches to economic analysis.
    Keywords: homo oeconomicus, marginalist revolution, behavioural economics, economic man, rational choice theory.
    Date: 2013–05–02
  10. By: Jürgen Essletzbichler
    Abstract: This paper builds on and complements work by evolutionary economic geographers on the role of industry relatedness for regional economic development and extends this work into a number of methodological and empirical directions. First, while recent work defines relatedness through co-occurrence, this paper measures relatedness as intensity of input-output links between industry pairs. Second, this measure is employed to examine industry evolution in 360 U.S. metropolitan areas over the period 1977-1997. The paper confirms the findings of existing work: Industries are more likely to be members of and enter and less likely to exit a metropolitan industry portfolio if they are technologically related to those industries. Third, based on average industry relatedness in a metropolitan area, an employment weighted measure of metropolitan technological cohesion is developed. Changes in technological cohesion can then be decomposed into selection, entry and exit effects revealing that the change in technological cohesion is not only due to the entry and exit of related industries but employment growth in strongly related incumbent industries.
    Keywords: Evolutionary economic geography, industry relatedness, industrial branching, technological cohesion, selection, entry, exit
    Date: 2013–05
  11. By: Paul Plummer; Matthew Tonts
    Abstract: This paper contributes to debates about that application and relevance of evolutionary concepts in the analysis of regional economies. In particular, we address the propostion that geography and history matter in shaping regional economic development by drawing on the concepts and methodology of dynamic econometrics, offering an analysis of Western Australia, 1981-2008. More specifically we test for path and place dependence using data on incomes per capita for regions within the State. The results provide evidence of both path and place dependence, although indicate that there is a degree of heterogeneity in how places are evolving and responding to shocks.
    Date: 2013–05

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