nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2013‒12‒29
fourteen papers chosen by
Matthew Baker
City University of New York

  1. Evolutionary Economics By Kurt Dopfer
  2. Risk aversion relates to cognitive ability: Fact or Fiction? By Ola Andersson; Håkan J. Holm; Jean-Robert Tyran; Erik Wengström
  3. Promises and Expectations By Florian Ederer; Alexander Stremitzer
  4. Two Studies on the Interplay between Social Preferences and Individual Biological Features By S., Sanchez Pages; E., Tureigano
  5. Adaptive vs. Eductive Learning: Theory and Evidence By John Duffy; Te Bao
  6. The Future of Evolutionary Economics: Why Modalities Matter By Ulrich Witt
  7. Second Thoughts on Free Riding By Ulrik H. Nielsen; Jean-Robert Tyran; Erik Wengström
  8. Top Contributors as Punishers By Daniela Grieco; Marco Faillo; Luca Zarri
  9. Evidential equilibria: Heuristics and biases in static games By Sanjit Dhami; Ali al-Nowaihi
  10. Cultures, Worldviews, and Intergenerational Altruism By Masao Ogaki; Fumio Ohtake; Akiko Kamesaka; Kohei Kubota
  11. Asian Disease-type of Framing of Outcomes as an Historical Curiosity By Dorian Jullien
  12. Who is the fairest of them all? The independent effect of attractive features and self-perceived attractiveness on cooperation among women By Munoz-Reyes, J. A.; Pita, M.; Arjona, M.; Sanchez-Pages, S.; Turiegano, E.
  13. Limited self-control and long-run growth By Strulik, Holger
  14. Complexity and Bounded Rationality in Individual Decision Problemsing. By Diasakos, Theodoros M

  1. By: Kurt Dopfer
    Date: 2013–12–18
  2. By: Ola Andersson (Research Institute of Industrial Economics (IFN)); Håkan J. Holm (Lund University - Department of Economics); Jean-Robert Tyran (Centre for Economic Policy Research (CEPR), University of Vienna, Department of Economics, Copenhagen University); Erik Wengström (Department of Economics, Copenhagen University)
    Abstract: Recent experimental studies suggest that risk aversion is negatively related to cognitive ability. In this paper we report evidence that this relation might be spurious. We recruit a large subject pool drawn from the general Danish population for our experiment. By presenting subjects with choice tasks that vary the bias induced by random choices, we are able to generate both negative and positive correlations between risk aversion and cognitive ability. Structural estimation allowing for heterogeneity of noise yields no significant relation between risk aversion and cognitive ability. Our results suggest that cognitive ability is related to random decision making rather than to risk preferences.
    Keywords: risk preference, cognitive ability, experiment, noise
    JEL: C81 C91 D12 D81
    Date: 2013–09–04
  3. By: Florian Ederer (School of Management, Yale University); Alexander Stremitzer (UCLA School of Law)
    Abstract: We investigate why people keep their promises in the absence of external enforcement mechanisms and reputational effects. In a controlled economic laboratory experiment we show that exogenous variation of second-order expectations (promisors' expectations about promisees' expectations that the promise will be kept) leads to a significant change in promisor behavior. We document for the first time that a promisor's aversion to disappoint the promisee's expectation leads her to keep her promise. We propose a simple theory of lexicographic promise keeping that is supported by our results and nests the findings of previous contributions as special cases.
    Keywords: A13, C91, D03, C72, D64, K12
    Date: 2013–12
  4. By: S., Sanchez Pages; E., Tureigano
    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
  5. By: John Duffy; Te Bao
    Abstract: Adaptive learning and eductive learning are two widely used ways of modeling learning behavior in macroeconomics. Both approaches yield restrictions on model parameters under which agents are able to learn a rational expectation equilibrium (REE) but these restrictions do not always overlap with one another. In this paper we report on an experiment where we exploit such differences in stability conditions under adaptive and eductive learning to investigate which learning approach provides a better description of the learning behavior of human subjects. Our results suggest that adaptive learning is a better predictor of whether a system converges to REE, while the path by which the system converges appears to be a mixture of both adaptive and eductive learning model predictions.
    Keywords: Rational Expectations, Adaptive Learning, Eductive Learning, Experimental Economics.
    JEL: C91 C92 D83 D84
    Date: 2013–12
  6. By: Ulrich Witt
    Abstract: The label "evolutionary" is currently used in economics to describe a variety of theories and topics. Far from inspiring the paradigmatic shift envisioned by some of the early proponents of evolutionary economics, the patchwork of theories and topics in this field demonstrates the need of an overarching interpretative frame. In other disciplines, the adoption of the Darwinian theory of evolution extended by hypotheses on cultural evolution has led to such a paradigm shift. This paper explores what can be accomplished by adopting that theory as an interpretative frame also for economics. Attention is directed in particular to the modalities of causal explanations that are germane to such a frame. The relevance of these modalities to the various thematic and theoretical specializations carrying the label "evolutionary" in economics is established to demonstrate the suitability as a common frame. Moreover, these modalities suggest a criterion on the basis of which evolutionary research can be distinguished from non-evolutionary research in economics. The case of institutional economics is used to outline some implications in an exemplary fashion.
    Date: 2013–12–18
  7. By: Ulrik H. Nielsen (Department of Economics, Copenhagen University); Jean-Robert Tyran (Centre for Economic Policy Research (CEPR), University of Vienna, Department of Economics, Copenhagen University); Erik Wengström (Department of Economics, Copenhagen University)
    Abstract: We use the strategy method to classify subjects into cooperator types in a large-scale online Public Goods Game and find that free riders spend more time on making their decisions than conditional cooperators and other cooperator types. This result is robust to reversing the framing of the game and is not driven by free riders lacking cognitive ability, confusion, or natural swiftness in responding. Our results suggest that conditional cooperation serves as a norm and that free riders need time to resolve a moral dilemma.
    Keywords: Response Time, Free Riding, Public Goods, Experiment
    JEL: C70 C90 D03
    Date: 2013–09–04
  8. By: Daniela Grieco (Department of Economics (University of Verona)); Marco Faillo (Department of Economics, University of Trento); Luca Zarri (Department of Economics (University of Verona))
    Abstract: We experimentally investigate cooperation within a finitely repeated public goods game framework where peer punishment is possible but, unlike previous work, in each round access to sanctioning power is exclusively awarded to the group’s top contributor. We compare this mechanism with a treatment where the right to punish is assigned to one randomly selected subject (O’Gorman et al., 2009), as well as with classic discretionary punishment (Fehr and Gächter, 2000) and with ‘legitimate punishment’ (Faillo et al., 2013). We show that the “Top Contributors as Punishers” mechanism is extremely effective in both raising cooperation and welfare, compared to the randomly selected punisher treatment and to discretionary punishment. This interestingly occurs despite the fact that the (first and second-order) free riding problem may lead subjects to perceive the new institution as an excessively demanding one: in fact, the lure of the top contributor role induces many subjects to significantly contribute and many top contributors to incur relevant costs to sanction others.
    Keywords: Public Goods Games; Cooperation; Legitimacy; Solitary Punishment; Behavioral Mechanism Design.
    JEL: C73 C91 D02 D63
    Date: 2013–12
  9. By: Sanjit Dhami; Ali al-Nowaihi
    Abstract: Standard equilibrium concepts in game theory find it difficult to explain the empirical evidence in a large number of static games such as prisoners’ dilemma, voting, public goods, oligopoly, etc. Under uncertainty about what others will do in one-shot games of complete and incomplete information, evidence suggests that people often use evidential reasoning (ER), i.e., they assign diagnostic significance to their own actions in forming beliefs about the actions of other like- minded players. This is best viewed as a heuristic or bias relative to the standard approach. We provide a formal theoretical framework that incorporates ER into static games by proposing evidential games and the relevant solution concept- evidential equilibrium (EE). We derive the relation between a Nash equilibrium and an EE. We also apply EE to several common games including the prisoners’ dilemma and oligopoly games.
    Keywords: Evidential reasoning; causal reasoning; evidential games; social projec- tion functions; ingroups and outgroups; evidential equilibria and consistent eviden- tial equilibria; Nash equilibria; the prisoners.dilemma and oligopoly games; common knowledge and epistemic foundations.
    Date: 2013–11
  10. By: Masao Ogaki (Keio University); Fumio Ohtake (Osaka University); Akiko Kamesaka (Aoyama Gakuin University); Kohei Kubota (Yamagata University)
    Abstract: This paper presents empirical evidence concerning effects of cultural differences on parents' attitudes toward children from unique U.S. and Japanese survey data. These data sets have been collected by Osaka University, and contain questions concerning worldviews and religions, hypothetical questions about parental behavior, and questions about socioeconomic variables. The data show that U.S. parents tend to be tougher than Japanese parents toward young children. Our evidence suggests that contents of worldview beliefs held by parents affect parents' attitudes toward children. Our empirical evidence also indicates that people who are confident about worldview beliefs tend to show tough attitudes toward their children. Because U.S. parents are much more confident than Japanese parents in worldview beliefs on the average, this cultural difference helps explain a substantial portion of the difference in parental attitudes between U.S. and Japanese parents.
    Date: 2013
  11. By: Dorian Jullien (University of Nice Sophia Antipolis; GREDEG CNRS)
    Abstract: This paper discusses the ways by which a certain type of behavioral deviation from expected utility theory has been handled by psychologists and economists. With respect to the historical background of decision theory in economics, it is argued that there are good reasons for more theoretical developments from this behavioral deviation.
    Keywords: behavioral economics, psychology, decision theory, microeconomics, rationality
    JEL: D00 D01 D03 B21 B41
    Date: 2013–12
  12. By: Munoz-Reyes, J. A.; Pita, M.; Arjona, M.; Sanchez-Pages, S.; Turiegano, E.
    Abstract: The present paper analyzes the extent to which attractiveness-related variables affect cooperative behavior in women. Cooperativeness is evaluated through a Prisoner's Dilemma Game (PDG). We consider several morphometric variables related to attractiveness: Fluctuating Asymmetry (FA), Waist-Hip Ratio (WHR, Body Mass Index (BMI) and Facial Femininity (FF). These variables have been shown to predict human behavior. We also include as a control variable a score for Self-Perceived Attractiveness (SPA). We test differences in these variables according to behavior in the PDG. Our results reveal that low FA women cooperate less frequently in the PDG. We also find that women with lower WHR are more cooperative. This result contradicts the expected relation between WHR and behavior in the PDG. We show that this effect of WHR on cooperation operates through its influence on the expectation that participants hold on the cooperative intent of their counterpart. In addition, we show that the effect of attractive features on cooperation occurs independently of the participants' perception of their own appeal. Finally, we discuss our results in the context of the evolution of cooperative behavior and under the hypothesis that attractiveness is a reliable indicator of phenotypic quality.
    Keywords: Cooperation, Attractiveness, Fluctuating asymmetry, Waist-hip ratio, Body 46 Mass Index, Facial Femininity,
    Date: 2013
  13. By: Strulik, Holger
    Abstract: This paper integrates imperfect self-control into the standard model of endogenous growth. Individuals are conceptualized as dual-selves consisting of a long-run planner and a short-run doer. The long-run self can partly control the short-run self´s strife for immediate gratification. It is shown that the solution is structurally equivalent to the one of the standard endogenous growth model as long as self-control is sufficiently strong. Within a certain range of self-control an investment subsidy can be useful in order to reduce consumption and to increase investment, growth, and welfare of the long-run self. A consumption tax, perhaps surprisingly, is counterproductive. It induces individuals with limited self-control to consume even more. --
    Keywords: temptation,self-control,consumption,investment,endogenous growth
    JEL: D91 E21 O40
    Date: 2013
  14. By: Diasakos, Theodoros M
    Abstract: I develop a model of endogenous bounded rationality due to search costs, arising implicitly from the problems complexity. The decision maker is not required to know the entire structure of the problem when making choices but can think ahead, through costly search, to reveal more of it. However, the costs of search are not assumed exogenously; they are inferred from revealed preferences through her choices. Thus, bounded rationality and its extent emerge endogenously: as problems become simpler or as the benefits of deeper search become larger relative to its costs, the choices more closely resemble those of a rational agent. For a fixed decision problem, the costs of search will vary across agents. For a given decision maker, they will vary across problems. The model explains, therefore, why the disparity, between observed choices and those prescribed under rationality, varies across agents and problems. It also suggests, under reasonable assumptions, an identifying prediction: a relation between the benefits of deeper search and the depth of the search. As long as calibration of the search costs is possible, this can be tested on any agent-problem pair. My approach provides a common framework for depicting the underlying limitations that force departures from rationality in different and unrelated decision-making situations. Specifically, I show that it is consistent with violations of timing independence in temporal framing problems, dynamic inconsistency and diversification bias in sequential versus simultaneous choice problems, and with plausible but contrasting risk attitudes across small- and large-stakes gambles.
    Date: 2013

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