nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2014‒04‒29
seven papers chosen by
Matthew Baker
City University of New York

  1. Trusting Former Rebels: An Experimental Approach to Understanding Reintegration after Civil War By Michal Bauer; Nathan Fiala; Ian Levely
  2. Large Deviations and Stochastic Stability in the Small Noise Double Limit, I: Theory By William H. Sandholm; Mathias Staudigl
  3. Large Deviations and Stochastic Stability in the Small Noise Double Limit, II: The Logit Model By William H. Sandholm; Mathias Staudigl
  4. "On the Mechanics of Human Cooperation: An OLG Repeated Game in a Community Union" By Michihiro Kandori; Shinya Obayashi
  5. Experimental Games on Networks: Underpinnings of Behavior and Equilibrium Selection By Charness, Gary; Feri, Francesco; Meléndez-Jiménez, Miguel A.; Sutter, Matthias
  6. Is Religion Associated with Entrepreneurial Activity? By Henley, Andrew
  7. Uzawa(1961)’s Steady-State Theorem in Malthusian Model By Li, Defu; Huang, Jiuli

  1. By: Michal Bauer; Nathan Fiala; Ian Levely
    Abstract: The stability of many post-conflict societies rests on the successful reintegration of former soldiers. We use an experimental approach to study reintegration in Northern Uganda and examine behavior of former soldiers together with the behavior of receiving communities towards this group. We focus on trust-based interactions and find that individual trustworthiness increases with the length of time a person was with the Lord's Resistance Army, a rebel group which forcibly recruited a large fraction of young people in the area. The effect is strongest among former soldiers who were abducted during childhood and is mute among those who soldiered during adulthood. These results are consistent with predictions of recent theories that highlight the importance of cooperation during war. Furthermore, members of receiving communities with an abductee son, who thus have better knowledge of former soldiers are aware of the behavioral difference. They believe former soldiers are more trustworthy than their peers and trust them more. Last, we find no evidence of preference-based discrimination, suggesting that anger is attenuated when communities do not attribute responsibility for committed violence to returning soldiers.
    Keywords: trust; cooperation; civil war; endogenous preferences; soldiers; reintegration;
    JEL: C93 D03 D74 O12
    Date: 2014–03
  2. By: William H. Sandholm (Department of Economics, University of Wisconsin, Madison); Mathias Staudigl (Center for Mathematical Economics, Bielefeld University)
    Abstract: We consider a model of stochastic evolution under general noisy best response protocols, allowing the probabilities of suboptimal choices to depend on their payoff consequences. Our analysis focuses on behavior in the small noise double limit: we first take the noise level in agents’ decisions to zero, and then take the population size to infinity. We show that in this double limit, escape from and transitions between equilibria can be described in terms of solutions to continuous optimal control problems. These are used in turn to characterize the asymptotics of the the stationary distribution, and so to determine the stochastically stable states. The control problems are tractable in certain interesting cases, allowing analytical descriptions of the escape dynamics and long run behavior of the stochastic evolutionary process.
    Date: 2014–03
  3. By: William H. Sandholm (Department of Economics, University of Wisconsin, Madison); Mathias Staudigl (Center for Mathematical Economics, Bielefeld University)
    Abstract: We describe the large deviations properties, stationary distribution asymptotics, and stochastically stable states of stochastic evolutionary processes based on the logit choice rule, focusing on behavior in the small noise double limit. These aspects of the stochastic evolutionary process can be characterized in terms of solutions to certain minimum cost path problems. We solve these problems explicitly using tools from optimal control theory. The analysis focuses on three-strategy coordination games that satisfy the marginal bandwagon property and that have an interior equilibrium, but our approach can be applied to other classes of games and other choice rules.
    Date: 2014–03
  4. By: Michihiro Kandori (Faculty of Economics, The University of Tokyo); Shinya Obayashi (chool of Arts & Letters, Tohoku University)
    Abstract:    Humans are capable of cooperating with one another even when it is costly and a deviation provides an immediate gain. An important reason is that cooperation is reciprocated or rewarded and deviations are penalized in later stages. For cooperation to be sustainable, not only must rewards and penalties be strong enough, but individuals should also have the right incentives to provide rewards and punishments. Codes of conduct with such properties have been studied extensively in game theory (as repeated game equilibria), and the literature on the evolution of cooperation shows how equilibrium behavior might emerge and proliferate in society. We found that community unions, a subclass of labor unions that admits individual affiliations, are ideal to corroborate these theories with reality, because (i) their activities are simple and (ii) they have a structure which closely resembles a theoretical model, the OLG (overlapping generations) repeated game. A detailed case study of a community union revealed a possible equilibrium that can function under the very limited observability in the union. The equilibrium code of conduct appears to be a natural focal point based on simple heuristic reasoning. The union we studied was created out of necessity for cooperation, without knowing or anticipating how cooperation might be sustained. The union has successfully resolved about 3,000 labor disputes and created a number of offspring.
    Date: 2014–04
  5. By: Charness, Gary (University of California, Santa Barbara); Feri, Francesco (University of Innsbruck); Meléndez-Jiménez, Miguel A. (University of Malaga); Sutter, Matthias (European University Institute)
    Abstract: In this paper, we describe a series of laboratory experiments that implement specific examples of a more general network structure and we examine equilibrium selection. Specifically, actions are either strategic substitutes or strategic complements, and participants have either complete or incomplete information about the structure of a random network. Since economic environments typically have a considerable degree of complementarity or substitutability, this framework applies to a wide variety of settings. The degree of equilibrium play is striking, in particular with incomplete information. Behavior closely resembles the theoretical equilibrium whenever this is unique; when there are multiple equilibria, general features of networks, such as connectivity, clustering, and the degree of the players, help to predict informed behavior in the lab. People appear to be strongly attracted to maximizing aggregate payoffs (social efficiency), but there are forces that moderate this attraction: 1) people seem content with (in the aggregate) capturing only the lion's share of the efficient profits in exchange for reduced exposure to loss, and 2) uncertainty about the network structure makes it considerably more difficult to coordinate on a demanding, but efficient, equilibrium that is typically implemented with complete information.
    Keywords: random networks, incomplete information, connectivity, clustering, strategic substitutes, strategic complements, experiment
    JEL: C71 C91 D03 D85
    Date: 2014–04
  6. By: Henley, Andrew (Aberystwyth University)
    Abstract: This paper provides a quantitative investigation of the strength of the potential relationship between entrepreneurial activity and religious affiliation. The relationship between religion and economic development has attracted recent attention. A positive association may indicate that religion raises the social acceptability of entrepreneurial activity, by inculcating incentives to accumulate wealth and acquire personal responsibility, as well as providing social capital and may be particularly effective where state governance systems are weak. Institutionalist perspectives suggest that religious institutions may support definition of property rights. Economic benefits flow through reduced transactions costs. This paper engages these discussions in order to present a preliminary empirical investigation of the relationships which may exist across national boundaries between religion and entrepreneurship. Definitions of entrepreneurship are taken from the Global Entrepreneurship Monitor (GEM) studies for 2011 and 2012, focusing on the individual rather than on the business venture. Recent data on religious affiliation across countries are used to construct various measures of religious activity and diversity. Preliminary findings suggest, in particular, a significant association between GEM indicators and evangelical-pentecostal-charismatic Christian affiliation. The strength of these associations is offset by state regulation of religion. These findings suggest that attention needs to be paid to the potentially important role that certain forms of religion might play is providing a supportive cultural environment for entrepreneurship. They also suggest that policy-makers may wish to pay closer attention to the potentially supportive role that certain religious organizations might play in new business formation.
    Keywords: entrepreneurship, economic development, religion
    JEL: L26 M13 O43 Z12
    Date: 2014–04
  7. By: Li, Defu; Huang, Jiuli
    Abstract: This paper proves that there is a similar Uzawa (1961) steady-state growth theorem in a Malthusian model: If that model possesses steady-state growth, then technical change must be purely land-augmenting and cannot include labor augmentation.
    Keywords: Malthusian Model, Neoclassical Growth Model, Uzawa’s Steady-State Theorem
    JEL: O33 O41
    Date: 2014–04

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