nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2014‒02‒02
sixteen papers chosen by
Matthew Baker
City University of New York

  1. Social norms or low-cost heuristics? An experimental investigation of imitative behavior By Cicognani, Simona; Mittone, Luigi
  2. Evolutionary Beliefs and Financial Markets By Elyès Jouini; Clotilde Napp; Yannick Viossat
  3. Reciprocal preferences and the unraveling of gift-exchange By Riedl A.M.; Dariel A.
  4. The Individual and Joint Performance of Economic Preferences, Personality, and Self-Control in Predicting Criminal Behavior By Friehe, Tim; Schildberg-Hörisch, Hannah
  5. Cooperation preferences and framing effects By Dariel A.
  6. Selfish Altruism, Fierce Cooperation and the Emergence of Cooperative Equilibria from Passing and Shooting By Askitas, Nikos
  7. Emergence of Cooperation in Heterogeneous Population: A Discrete-Time Replicator Dynamics Analysis By Escobedo Martínez, Ramón; Laruelle, Annick
  8. Parental investment and the intergenerational transmission of economic preferences By Zumbühl M.A.; Pfann G.A.; Pfann G.A.; Dohmen T.J.
  9. A Dynamic Model of Belief-Dependent Conformity to Social Norms By Sontuoso, Alessandro
  10. How Durable are Social Norms? Immigrant Trust and Generosity in 132 Countries By John F. Helliwell; Shun Wang; Jinwen Xu
  11. The Nature of Civil Conflict By Cemal Eren Arbatli; Quamrul Ashraf; Oded Galor
  12. Adaptive vs. eductive learning: Theory and evidence By Duffy, John; Bao, Te
  13. In the long-run we are all dead: On the benefits of peer punishment in rich environments By Engelmann, Dirk; Nikiforakis, Nikos
  14. Why free markets die: An evolutionary perspective By Eduardo Viegas; Stuart P. Cockburn; Henrik Jeldtoft Jensen; Geoffrey B. West
  15. Reinforcement Learning and Human Behavior By Hanan Shteingart; Yonatan Loewenstein
  16. Audit Imitation and Efficient Contagion By Tristan Boyer; Nicolas Jonard

  1. By: Cicognani, Simona; Mittone, Luigi
    Abstract: This paper extends choice theory by allowing for the interaction between cognitive costs and social norms. The authors experimentally investigate the role of imitation and temporal decisional patterns when participants face a task which is costly in cognitive terms. They identify two main reasons for imitative behavior. First, individuals belonging to a community might want to conform to others to obey to social norms. Second, individuals might be boundedly rational and consider imitation as a decisional device when comparing alternatives is cognitively demanding. In order to empirically disentangle the two effects, the authors present a laboratory experiment in which they model the choice of different alternatives through high or low cognitive costs and feedback information given to subjects. Their results do not provide strong evidence for imitative behavior. They find instead a temporal pattern in the distribution of choices, both in the high-cost and low-cost conditions. --
    Keywords: social norms,cognitive costs,laboratory experiments
    JEL: C92 D81 Z13
    Date: 2014
  2. By: Elyès Jouini (CEREMADE - CEntre de REcherches en MAthématiques de la DEcision - CNRS : UMR7534 - Université Paris IX - Paris Dauphine); Clotilde Napp (DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris IX - Paris Dauphine); Yannick Viossat (CEREMADE - CEntre de REcherches en MAthématiques de la DEcision - CNRS : UMR7534 - Université Paris IX - Paris Dauphine)
    Abstract: Why do investors keep different opinions even though they learn from their own failures and successes? Why do investors keep different opinions even though they observe each other and learn from their relative failures and successes? We analyze beliefs dynamics when beliefs result from a very general learning process that favors beliefs leading to higher absolute or relative utility levels. We show that such a process converges to the Nash equilibrium in a game of strategic belief choices. The asymptotic beliefs are subjective and heterogeneous across the agents. Optimism (respectively overconfidence) as well as pessimism (respectively doubt) emerge from the learning process. Furthermore, we obtain a positive correlation between pessimism (respectively doubt) and risk tolerance. Under reasonable assumptions, beliefs exhibit a pessimistic bias and, as a consequence, the risk premium is higher than in a standard setting.
    Keywords: heterogeneous beliefs, Beliefs formation, evolutionary game theory, risk premium, pessimism
    Date: 2012–03–01
  3. 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
  4. By: Friehe, Tim (University of Bonn); Schildberg-Hörisch, Hannah (University of Bonn)
    Abstract: We explore the individual and joint explanatory power of concepts from economics, psychology, and criminology for criminal behavior. More precisely, we consider risk and time preferences, personality traits from psychology (Big Five and locus of control), and a self-control scale from criminology. We find that economic preferences, personality traits, and self-control complement each other in predicting criminal behavior. The most significant predictors stem from all three disciplines: risk aversion, conscientiousness, and high self-control make criminal behavior less likely. Our results illustrate that integrating concepts from various disciplines enhances our understanding of individual behavior.
    Keywords: crime, risk preferences, time preferences, personality traits, self-control, experiment
    JEL: K42 D03 D81 D90 C21 C91
    Date: 2014–01
  5. 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; Public Goods;
    JEL: C91 H41
    Date: 2013
  6. By: Askitas, Nikos (IZA)
    Abstract: There is continuing debate about what explains cooperation and self-sacrifice in nature and in particular in humans. This paper suggests a new way to think about this famous problem. I argue that, for an evolutionary biologist as well as a quantitative social scientist, the triangle of two players in the presence of a predator (passing and shooting in 2-on-1 situations) is a fundamental conceptual building-block for understanding these phenomena. I show how, in the presence of a predator, cooperative equilibria rationally emerge among entirely selfish agents. If we examine the dynamics of such a model, and bias the lead player (ball possessor with pass/shoot i.e. cooperate/defect dilemma) in the selfish direction by only an infinitesimal amount, then, remarkably, the trajectories of the new system move towards a cooperative equilibrium. I argue that "predators" are common in the biological jungle but also in everyday human settings. Intuitively, this paper builds on the simple idea – a familiar one to a biologist observing the natural world but perhaps less so to social scientists – that everybody has enemies. As a technical contribution, I solve these models analytically in the unbiased case and numerically by an O(h5) approximation with the Runge-Kutta method.
    Keywords: evolutionary game theory, fitness, altruism, evolution of cooperation, decoy, Nash equlibrium, repeated matching-pennies game, predator, emergence, autonomous ODE, classical Runge-Kutta method
    JEL: C71 C73 D87
    Date: 2014–01
  7. By: Escobedo Martínez, Ramón; Laruelle, Annick
    Abstract: The emergence of cooperation is analyzed in heterogeneous populations where individuals can be classified in two groups according to their phenotypic appearance. Phenotype recognition is assumed for all individuals: individuals are able to identify the type of every other individual, but fail to recognize their own type, and thus behave under partial information conditions. The interactions between individuals are described by 2 × 2 symmetric games where individuals can either cooperate or defect. The evolution of such populations is studied in the framework of evolutionary game by means of the replicator dynamics. Overlapping generations are considered, so the replicator equations are formulated in discrete-time form. The well-posedness conditions of the system are derived. Depending on the parameters of the game, a restriction may exist for the generation length. The stability analysis of the dynamical system is carried out and a detailed description of the behavior of trajectories starting from the interior of the state-space is given. We find that, provided the conditions of well-posedness are verified, the linear stability of monomorphic states in the discrete-time replicator coincides with the one of the continuous case. Specific from the discrete-time case, a relaxed restriction for the generation length is derived, for which larger time-steps can be used without compromising the well-posedness of the replicator system.
    Keywords: discrete-time replicator dynamics, stability, evolutionary games
    JEL: C02 C65 D74
    Date: 2013–12
  8. By: Zumbühl M.A.; Pfann G.A.; Pfann G.A.; Dohmen T.J. (ROA)
    Abstract: We study empirically whether there is scope for parents to shape the economicpreferences and attitudes of their children through purposeful investments. Weexploit 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 respect to 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.
    Keywords: Information, Knowledge, and Uncertainty: General; Marriage; Marital Dissolution; Family Structure; Domestic Abuse; Fertility; Family Planning; Child Care; Children; Youth; Job, Occupational, and Intergenerational Mobility; Promotion; Economic Sociology; Economic Anthropology; Social and Economic Stratification;
    JEL: D80 J12 J13 J62 Z13
    Date: 2013
  9. By: Sontuoso, Alessandro
    Abstract: Human conduct is often guided by “conformist preferences”, which thrive on behavioral expectations within a society, with conformity being the act of changing one’s behavior to match the purported beliefs of others. Despite a growing research line considering preferences for a fair outcome allocation, economic theories do not explain the fundamental conditions for some social norm – whether of fairness or not – to be followed. Inspired by Bicchieri’s account of norms (C.Bicchieri, The Grammar of Society. CambridgeUP [2006]), I develop a behavioral theory of norm conformity building on the Battigalli-Dufwenberg “psychological” framework (P.Battigalli and M.Dufwenberg, Dynamic Psychological Games, J.Econ.Theory, 144:1-35 [2009]).
    Keywords: Conformist Preferences; Social Norms; Social Dilemmas; Psychological Game Theory; Behavioral Economics
    JEL: A13 C72 C92 D63 H41
    Date: 2013–12–27
  10. By: John F. Helliwell; Shun Wang; Jinwen Xu
    Abstract: This paper estimates the global prevalence of social trust and generosity among immigrants. We combine individual and national level data from immigrants and native-born respondents in more than 130 countries, using seven waves of the Gallup World Poll (2005-2012). The results show that the effect of source country social trust is about one-third as large as that from trust levels in the destination countries where the migrant now lives. Migrants from low-trust environments are especially affected by the low trust in their country of origin even after migration, while migrants from high-trust environments are less likely to import the high trust of their country of origin to their current country of residence. We also show that, holding constant the effects of imported trust, immigrants and the native-born have similar levels of social trust. We find similar, but smaller, footprint effects for generosity. To help confirm that the footprint effects for social norms represent more than just that it takes time to learn about new surroundings, we undertake similar tests for trust in national institutions, where we would not expect to see footprint effects. In contrast to our social trust and generosity results, and consistent with our expectations, we find no footprint effects for opinions about domestic institutions in the new country.
    JEL: J15 P51 Z13
    Date: 2014–01
  11. By: Cemal Eren Arbatli; Quamrul Ashraf; Oded Galor
    Abstract: This research empirically establishes that the emergence, prevalence, and recurrence of civil conflict in the modern era reflect the long shadow of prehistory. Exploiting variations across contemporary national populations, it demonstrates that genetic diversity, as determined pre- dominantly tens of thousands of years ago, has contributed significantly to the frequency, incidence, and onset of both overall and ethnic civil conflicts over the last half century, accounting for a large set of geographical and institutional correlates of civil conflict, as well as measures of economic development. These findings arguably reflect the adverse effect of genetic diversity on interpersonal trust and cooperation, the potential impact of genetic diversity on income inequality, the potential association between genetic diversity and divergence in preferences for public goods and redistributive policies, and the contribution of genetic diversity to the degree of fractionalization and polarization across ethnic and linguistic groups in the population
    Keywords: #
    Date: 2013
  12. By: Duffy, John; Bao, Te (Groningen University)
    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.
    Date: 2014
  13. By: Engelmann, Dirk; Nikiforakis, Nikos
    Abstract: We investigate whether peer punishment is an efficient mechanism for enforcing cooperation in an experiment with a long time horizon. Previous evidence suggests that the costs of peer punishment can be outweighed by the benefits of higher cooperation, if (i) there is a sufficiently long time horizon and (ii) punishment cannot be avenged. However, in most instances in daily life, when individuals interact for an extended period of time, punishment can be retaliated. We use a design that imposes minimal restrictions on who can punish whom or when, and allows participants to employ a wide range of punishment strategies including retaliation of punishment. Similar to previous research, we find that, when punishment cannot be avenged, peer punishment leads to higher earnings relative to a baseline treatment without any punishment opportunities. However, in the more general setting, we find no evidence of group earnings increasing over time relative to the baseline treatment. Our results raise questions under what conditions peer punishment can be an efficient mechanism for enforcing cooperation. --
    JEL: C92 D70 H41
    Date: 2013
  14. By: Eduardo Viegas; Stuart P. Cockburn; Henrik Jeldtoft Jensen; Geoffrey B. West
    Abstract: Company mergers and acquisitions are often perceived to act as catalysts for corporate growth in free markets systems: it is conventional wisdom that those activities lead to better and more efficient markets. However, the broad adoption of this perception into corporate strategy is prone to result in a less diverse and more unstable environment, dominated by either very large or very small niche entities. We show here that ancestry, i.e. the cumulative history of mergers, is the key characteristic that encapsulates the diverse range of drivers behind mergers and acquisitions, across a range of industries and geographies. A long-term growth analysis reveals that entities which have been party to fewer mergers tend to grow faster than more highly acquisitive businesses.
    Date: 2014–01
  15. By: Hanan Shteingart; Yonatan Loewenstein
    Abstract: The dominant computational approach to model operant learning and its underlying neural activity is model-free reinforcement learning (RL). However, there is accumulating behavioral and neuronal-related evidence that human (and animal) operant learning is far more multifaceted. Theoretical advances in RL, such as hierarchical and model-based RL extend the explanatory power of RL to account for some of these findings. Nevertheless, some other aspects of human behavior remain inexplicable even in the simplest tasks. Here we review developments and remaining challenges in relating RL models to human operant learning. In particular, we emphasize that learning a model of the world is an essential step prior or in parallel to learning the policy in RL and discuss alternative models that directly learn a policy without an explicit world model in terms of state-action pairs.
    Date: 2014–01
  16. By: Tristan Boyer; Nicolas Jonard
    Abstract: This paper is about the diffusion of cooperation in an infinite population of networked individuals repeatedly playing a Prisoner’s Dilemma. We formulate conditions on payoffs and network structure such that, starting from an initial seed group, imitative learning results in the overall adoption of cooperation — efficient contagion. Key to this result is the pattern of interaction among players who are at the same distance from the initial seed group. We find that the more these agents interact among themselves rather than with players who are closer to or further away from the initial seed group, the easier it is for efficient contagion to take place. We highlight the importance of cycles for efficient contagion, and show that the presence of critical edges prevents it. We also find that networks organized as dense clusters sparsely connected to one another tend to resist efficient contagion. Finally, we find that the likelihood of efficient contagion in a network increases when information neighborhoods extend beyond interaction neighborhoods.
    Keywords: networks, imitation, contagion
    JEL: C7 D8
    Date: 2014–01–06

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