nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2014‒08‒09
six papers chosen by
Matthew Baker
City University of New York

  1. The Dynamics of Personal Norms and the Emergence of Cultural Diversity By Vicente Calabuig; Gonzalo Olcina; Fabrizio Panebianco
  2. Adolescents, Cognitive Ability, and Minimax Play By Shachat, Jason; Geng, Sen; Peng, Yujia; Zhong, Huizhen
  3. National Happiness and Genetic Distance: A Cautious Exploration By Proto, Eugenio; Oswald, Andrew J.
  4. Reference-Dependent Preferences: Evidence from Marathon Runners By Eric J. Allen; Patricia M. Dechow; Devin G. Pope; George Wu
  5. Rainfall risk and religious membership in the late Nineteenth-Century United States By Philipp Ager; Antonio Ciccone
  6. Too Proud to Stop: Regret in Dynamic Decisions By Paul Viefers; Philipp Strack

  1. By: Vicente Calabuig (ERICES, Universidad de Valencia); Gonzalo Olcina (ERICES, Universidad de Valencia); Fabrizio Panebianco (Paris School of Economics)
    Abstract: In this paper we study cultural diversity in values or personal norms concerning effort or work ethics, the related and observable diversity in behavior and its economic consequences. Our goal is to investigate the impact on this type of cultural diversity of primitive economic and behavioral parameters of the group such as the distribution of skills in the group population, the sharing rule on total income that determines income distribution and the levels of materialism, conformism and consistency in the group. Agents participate each period in a team production game by choosing their level of costly effort. We analyze the emergence and evolution of a culture in a group in which members are guided by economic incentives and also follow personal norms of behavior. We take materialism, skills and the income distribution rule as given, but personal norms evolve along the life-cycle of the individuals according to two psychological forces: cognitive dissonance or consistency and informational conformity. We characterize the long-run outcomes of the group and study how the levels of diversity, both in personal norms and in behavior and the level of incoherence between both variables are determined by the primitives of the model. We also analyze how these parameters affect group aggregate production and social welfare.
    Keywords: Cultural Diversity, Personal Norms, Consistency, Conformity JEL
    JEL: C72 C69 D03
    Date: 2014–07
  2. By: Shachat, Jason; Geng, Sen; Peng, Yujia; Zhong, Huizhen
    Abstract: We conduct experiments with adolescent participants on repeated fixed play in three different zero-sum games which have mixed strategy minimax solutions. Further, we collect subject information on cognitive abilities and participation rates in competitive activities. We find the adolescents' correspondences with and deviations from minimax play largely consistent with previously and widely studied adult populations. Further, we find strategic sophistication in terms of implementation of the mixed minimax strategy as well as earnings are not correlated with cognitive ability nor previous experience in competitive situations.
    Keywords: Minimax; experimental game; adolescent; cognitive abilities
    JEL: C72 C93 D03
    Date: 2014–08–01
  3. By: Proto, Eugenio (The University of Warwick); Oswald, Andrew J. (The University of Warwick)
    Abstract: This paper examines a famous puzzle in social science. Why do some nations report such high happiness? Denmark, for instance, regularly tops the league table of rich nations’ well-being; Great Britain and the US enter further down; France and Italy do relatively poorly. Yet the explanation for this ranking one that holds even after adjustment for GDP and socio-economic and cultural variables remains unknown. We explore a new avenue. Using data on 131 countries, we cautiously document a range of evidence consistent with the hypothesis that certain nations may have a genetic advantage in well-being.
    Keywords: Happiness
    Date: 2014
  4. By: Eric J. Allen; Patricia M. Dechow; Devin G. Pope; George Wu
    Abstract: Models of reference-dependent preferences propose that individuals evaluate outcomes as gains or losses relative to a neutral reference point. We test for reference dependence in a large dataset of marathon finishing times (n = 9,524,071). Models of reference-dependent preferences such as prospect theory predict bunching of finishing times at reference points. We provide visual and statistical evidence that round numbers (e.g., a four-hour marathon) serve as reference points in this environment and as a result produce significant bunching of performance at these round numbers. Bunching is driven by planning and adjustments in effort provision near the finish line and cannot be explained by explicit rewards (e.g., qualifying for the Boston Marathon), peer effects, or institutional features (e.g., pacesetters). We calibrate a simple model of prospect theory as well as other models of reference dependence and show that the basic qualitative shape of the empirical distribution of finishing times is consistent with parameters that have previously been estimated in the laboratory.
    JEL: D03 J22
    Date: 2014–07
  5. By: Philipp Ager; Antonio Ciccone
    Abstract: Building on the idea that religious communities provide mutual insurance against some idiosyncratic risks, we argue that religious membership is more valuable in societies exposed to greater common risk. In our empirical analysis we exploit rainfall risk as a source of common economic risk in the nineteenth-century United States and show that religious communities were larger in counties where they faced greater rainfall risk. The link between rainfall risk and the size of religious communities is stronger in counties that were more agricultural, that had lower population densities, or that were exposed to greater rainfall risk during the growing season.
    Keywords: Religious community size, agricultural risk, informal insurance.
    Date: 2014–07
  6. By: Paul Viefers; Philipp Strack
    Abstract: Many economic situations involve the timing of irreversible decisions. E.g. People decide when to sell a stock or stop searching for a better price. We analyze the behavior of a decision maker who evaluates his choice relative to the ex-post optimal choice in an optimal stopping task. We derive the optimal strategy under such regret preferences, and show how it is different from that of an expected utility maximizer. We also show that if the decision maker never commits mistakes the behavior resulting from this strategy is observationally equivalent to that of an expected utility maximizer. We then test our theoretical predictions in the laboratory. The results from a structural discrete choice model we fit to our data provide strong evidence that many people's stopping behavior is largely determined by the anticipation of and aversion to regret.
    Keywords: Optimal stopping, Dynamic behavior, Regret
    JEL: D3 C91
    Date: 2014

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