nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2013‒07‒15
fourteen papers chosen by
Matthew Baker
City University of New York

  1. Revealed distributional preferences: Individuals vs. teams By Loukas Balafoutas; Rudolf Kerschbamer; Martin Kocher; Matthias Sutter
  2. Reciprocal preferences and the unraveling of gift-exchange By Riedl A.M.; Dariel A.
  3. Social Learning about Consumption By Isabelle Salle; Pascal Seppecher
  4. Transparency, Empowerment, Disempowerment and Trust in an Investment Environment By Kiridaran Kanagaretnam; Stuart Mestelman; S. M. Khalid Nainar; Mohamed Shehata
  5. Cognitive Load and Strategic Sophistication By Allred , Sarah; Duffy, Sean; Smith, John
  6. Problems of Sample-Selection Bias in the Historical Heights Literature: A Theoretical and Econometric Analysis By Bodenhorn, Howard; Guinnane, Timothy W.; Mroz, Thomas A.
  7. Inequality aversion causes equal or unequal division in alternating-offer bargaining By Kohler, Stefan
  8. Conflict, Evolution, Hegemony, and the Power of the State By David K. Levine; Salvatore Modica
  9. Parental investment and the intergenerational transmission of economic preferences and attitudes By Zumbühl M.A.; Pfann G.A.; Dohmen T.J.; Pfann G.A.
  10. The Cost of Segregation in Social Networks By Nizar Allouch
  11. Resisting Education By Carvalho, Jean-Paul; Koyama, Mark
  12. Trust, Growth and Well-being: New Evidence and Policy Implications By Algan, Yann; Cahuc, Pierre
  13. A role for cultural transmission in fertility transitions By BAUDIN, Thomas
  14. Institutions, shared guilt, and moral transgression By Rothenhäusler, Dominik; Schweizer, Nikolaus; Szech, Nora

  1. By: Loukas Balafoutas; Rudolf Kerschbamer; Martin Kocher; Matthias Sutter
    Abstract: We compare experimentally the revealed distributional preferences of individuals and teams in allocation tasks. We find that teams are significantly more benevolent than individuals in the domain of disadvantageous inequality while the benevolence in the domain of advantageous inequality is similar across decision makers. A consequence for the frequency of preference types is that while a substantial fraction of individuals is classified as inequality averse, this type disappears completely in teams. Spiteful types are markedly more frequent among individuals than among teams. On the other hand, by far more teams than individuals are classified as efficiency lovers.
    Keywords: Distributional Preferences, Social Preferences, Team Decisions, Individual Decisions, Stability of Preferences, Behavioral Economics, Experimental Economics
    JEL: C91 C92 D03 D63 D64
    Date: 2013–06
  2. By: Riedl A.M.; Dariel A. (GSBE)
    Abstract: We elicit reciprocal preferences in a firm-worker gift-exchange setting and relate them to actual behavior in a repeated gift-exchange game. We find that only a small minority of 10 percent of workers is materially selfish whereas 90 percent exhibit reciprocal preferences. However, the intensity of reciprocal preferences is weak in the sense that firms maximize profits by not relying on gift-exchange but by offering the lowest possible wage. Workers behavior in the repeated gift-exchange game is predicted by their elicited preferences, but the correlation between preferences and behavior is imperfect. Together with profit maximizing behavior of firms these observations can explain the observed unraveling of gift-exchange over time in our experiment and some recent field experiments.
    Keywords: Noncooperative Games; Design of Experiments: Laboratory, Group Behavior; Labor-Management Relations, Trade Unions, and Collective Bargaining: Other;
    JEL: C72 C92 J59
    Date: 2013
  3. By: Isabelle Salle; Pascal Seppecher
    Abstract: This paper applies a parsimonious learning model to the optimal consumption rule of Allen & Carroll (2001), and delivers convincing convergence dynamics towards the optimal rule within a limited amount of time. These findings constitute a significant improvement regarding previous results in the literature, both in terms of speed of convergence and parsimony of the learning model. The social learning model exhibits several appealing features: it is frugal (involving only two free parameters), easy to apply to a range of learning objectives, requires few procedures and little information. Particular care is given to behavioural interpretation of the modelling assumptions in light of evidence from the fields of psychology and social science. Our results highlight the need to depart from the genetic metaphor, and account for intentional decision-making, based on agents' relative performances. By contrast, we show that convergence is strongly hindered by exact imitation processes, or random exploration mechanisms, which are usually assumed when modelling social learning behaviour. Our results suggest a method for modelling bounded rationality, which could be tested most interestingly within the framework of a wide range of economic models with adaptive dynamics.
    Keywords: learning, bounded rationality, evolutionary algorithms, consumption rule
    JEL: D83 D91 C63 E21
    Date: 2013–05
  4. By: Kiridaran Kanagaretnam; Stuart Mestelman; S. M. Khalid Nainar; Mohamed Shehata
    Abstract: In a laboratory-controlled environment we provide experimental evidence on the effects of transparency (complete over incomplete information) and empowerment on trust (investment by a principal) and trustworthiness (reciprocal behavior of an agent). We implement a simple two-person investment game. We find that when principals are empowered by being able to punish agents who may not act in a way the principal believes is in the principal’s best interest, trust and investment increases over that which is realized in the absence of empowerment regardless of the degree of transparency. In transparent environments the effect of empowerment is about the same regardless of whether empowerment is introduced or removed. However, in opaque environments, the loss of empowerment has a substantially greater negative effect on trust than the positive effect associated with the introduction of empowerment. While this environment is substantially abstracted from the naturally occurring environment, these results suggest that practical public policies designed to increase transparency in financial transactions are likely to have positive effects on investment. Furthermore, public policies designed to empower principals, such as the Say-on-Pay practices, are likely to increase investment while the limitation of the empowerment of principals with respect to their agents (consistent with deregulation) will have a much more dramatic negative impact on trust (and ultimately, investment).
    Keywords: Investment, Empowerment, Disempowerment, Veto, Trust, Reciprocity, Say-on-Pay
    JEL: C7 C9 D3 D8
    Date: 2013–06
  5. By: Allred , Sarah; Duffy, Sean; Smith, John
    Abstract: We study the relationship between the cognitive load manipulation and strategic sophistication. The cognitive load manipulation is designed to reduce the subject's cognitive resources which are available for deliberation on a choice. In our experiment, subjects are placed under a large cognitive load (given a difficult number to remember) or a low cognitive load (given a number which is not difficult to remember). Subsequently, the subjects play a one-shot game then they are asked to recall the number. This procedure is repeated for various games, where a new number is given for each game. We find a nuanced and nonmonotonic relationship between cognitive load and strategic sophistication. This relationship is consistent with two effects. First, subjects under a high cognitive load tend to exhibit behavior consistent with the reduced ability to compute the optimal decision. Second, the cognitive load tends to affect the subject's perception of their relative standing in the distribution of cognitive ability. The net result of these two effects depends on the strategic setting. Our experiment provides indirect evidence on the literature which examines the relationship between measures of cognitive ability and strategic sophistication.
    Keywords: bounded rationality; experimental economics; working memory load; beauty contest; strategic sophistication; rational inattention
    JEL: C72 C91
    Date: 2013–07–03
  6. By: Bodenhorn, Howard (Clemson University); Guinnane, Timothy W. (Yale University); Mroz, Thomas A. (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.
    JEL: C46 C52 C81 I00 N30 O15 O47
    Date: 2013–05
  7. By: Kohler, Stefan
    Abstract: This note presents a solution to Rubinstein (1982)'s open-ended, alternating-offer bargaining problem for two equally patient bargainers that exhibit similar degrees of inequality aversion. Inequality-averse bargainers may perceive envy if being worse off and guilt if being better off, but they still reach agreement in the first period under complete information. If the perceived guilt is strong, then the inequality-averse bargainers split the bargaining surplus equally regardless of their degree of envy. If guilt is weak, then the agreed split is tilted away from the Rubinstein division towards a more unequal split. Envy and weak guilt have opposite effects on the bargaining outcome, and envy has a greater marginal impact than weak guilt. Similarly inequality-averse bargainers agree on the Rubinstein division if the strength of envy equals the discounted strength of guilt. As both bargainers sensation of inequality aversion diminishes, the bargaining outcome converges to the Rubinstein division.
    Keywords: alternating offers; bargaining; bargaining power; behavioral economics; envy; equity; fairness; guilt; negotiation; social preferences
    JEL: C78 D3 D63
    Date: 2013–07–06
  8. By: David K. Levine; Salvatore Modica
    Abstract: In a model of evolution driven by conflict between societies more powerful states have an advantage. When the influence of outsiders is small we show that this results in a tendency to hegemony. In a simple example in which institutions differ in their “exclusiveness” we find that these hegemonies will be inefficiently “extractive” in the sense of having inefficiently high taxes, high compensation for state officials, and low welfare.
    JEL: A0 A1 A10 C0 C00 C70 C72 C73 D0 D00 D01 D02 D03 D3 D42 D61 D63 D71 D72 D73 D74 D78
    Date: 2013–07
  9. By: Zumbühl M.A.; Pfann G.A.; Dohmen T.J.; Pfann G.A. (GSBE)
    Abstract: We study empirically whether there is scope for parents to shape the economic preferences and attitudes of their children through purposeful investments. We exploit information on the risk and trust attitudes of parents and their children, as well as rich information about parental efforts in the upbringing of their children from the German Socio-Economic Panel Study. Our results show that parents who invest more in the upbringing of their children are more similar to them with respectto risk and trust attitudes and thus transmit their own attitudes more strongly. The results are robust to including variables on the relationship between children and parents, family size, and the parents socioeconomic background.
    Date: 2013
  10. By: Nizar Allouch (, Queen Mary, University of London, School of Economics and Finance, UK)
    Abstract: This paper investigates the private provision of public goods in segregated societies. While most research agrees that segregation undermines public provision, the findings are mixed for private provision: social interactions, being strong within groups and limited across groups, may either increase or impede voluntary contributions. Moreover, although efficiency concerns generally provide a rationale for government intervention, surprisingly, little light is shed in the literature on the potential effectiveness of such intervention in a segregated society. This paper first develops an index based on social interactions, which, roughly speaking, measures the welfare impact of income redistribution in an arbitrary society. It then shows that the proposed index vanishes when applied to large segregated societies, which suggests an “asymptotic neutrality” of redistributive policies.
    Keywords: Public Goods, Segregated Society, Private Provision, Networks, Bonacich Transfer Index
    JEL: C72 D31 H41
    Date: 2013–05
  11. By: Carvalho, Jean-Paul; Koyama, Mark
    Abstract: We develop a model in which individuals choose education to improve their earnings and regulate the cultural traits they acquire via social transmission. When education makes individuals more receptive to mainstream culture, minority groups underinvest in education as a form of cultural resistance. Economic and cultural incentives interact in surprising ways that increase income inequality. An increase in the skill premium induces low-ability minority types to reduce education-a phenomenon we call resisting education. The model links technological progress, globalization and anti-discrimination policies (e.g. affirmative action, Jewish emancipation) to oppositional attitudes toward education.
    Keywords: Education; identity; inequality; cultural transmission; oppositional behavior;
    JEL: D10 D63 D71 I24 J24 Z12 Z13
    Date: 2013–07–02
  12. By: Algan, Yann (Sciences Po, Paris); Cahuc, Pierre (Ecole Polytechnique, Paris)
    Abstract: This survey reviews the recent research on trust, institutions and growth. It discusses the various measures of trust and documents the substantial heterogeneity of trust across space and time. The conceptual mechanisms and the methods employed to identify the causal impact of trust on economic performance are reviewed. We document the mechanisms of interactions between trust and economic development in the realms of finance, innovation, the organization of firms, the labor market and the product market. The last part reviews recent progress to identify how institutions and policies can affect trust and well-being.
    Keywords: trust, growth, institutions, well-being
    JEL: O11 O43 Z13
    Date: 2013–06
  13. By: BAUDIN, Thomas
  14. By: Rothenhäusler, Dominik; Schweizer, Nikolaus; Szech, Nora
    Abstract: We study how institutional design influences moral transgression. People are heterogeneous in their feelings of guilt and can share guilt with others. Institutions determine the number of supporters necessary for immoral outcomes to occur. With more supporters required, every supporter can share guilt more easily. This facilitates becoming a supporter. Conversely, an institution requiring more supporters must rely on people who have higher individual moral standards. We analyze individual thresholds for agreeing to a transgression, depending on the available options for sharing guilt by institutional design. On the aggregate level, we study how institutions affect the likelihood of immoral outcomes. -- Diese Arbeit untersucht den Einfluss von institutionellem Design auf moralische Übertretungen. Menschen unterscheiden sich im Ausmaß ihrer Schuldgefühle und können diese in einer Gruppe mit anderen teilen. Von den jeweiligen Institutionen hängt es ab, wie viel unterstützende Personen für unmoralisches Verhalten notwendig sind. Je mehr dies sind, desto leichter kann jede von ihnen Schuld auf andere abgeben. Dies wiederum erleichtert es, zum Unterstützer für Übertretungen zu werden. Umgekehrt muss eine Institution, für die mehr Unterstützer nötig sind, auf Personen vertrauen, die höhere individuelle moralische Standards haben. Wir analysieren individuelle Hemmschwellen für die Zustimmung zu Übertretungen in Abhängigkeit von den zur Verfügung stehenden Optionen, Schuld über das jeweilige institutionelle Design auf andere zu verteilen. Auf aggregierter Ebene studieren wir, wie Institutionen die Wahrscheinlichkeit von unmoralischem Verhalten beeinflussen.
    Keywords: Moral Decision Making,Shared Guilt,Group Absolution,Diffused Responsibility,Institutional Design,Committee Decisions,Moral Transgression
    JEL: D01 D03 D23 D63 D63 D82
    Date: 2013

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