nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2014‒11‒12
eight papers chosen by
Matthew Baker
City University of New York

  1. Consensus vs. Conformity in Mixed-Motive Games By Michael Naef; Alessandro Sontuoso
  2. On the intergenerational nature of criminal behavior By Bethencourt, Carlos; Kunze, Lars
  3. When Is The Best Time To Give Birth? By Frühwirth-Schnatter, Sylvia; Pamminger, Christoph; Weber, Andrea; Winter-Ebmer, Rudolf
  4. Dishonesty and Selection into Public Service By Hanna, Rema; Wang, Shing-Yi
  5. Islam, Inequality and Pre-Industrial Comparative Development By S. Michalopoulos; A. Naghavi; G. Prarolo
  6. Family Size as a Social Leveller for Children in the Second Demographic Transition By Tony Fahey
  7. Focal Points Revisited: Team Reasoning, the Principle of Insufficient Reason and Cognitive Hierarchy Theory By Bardsley, Nicholas; Ule, Aljaz
  8. Behavioral Finance By Hirshleifer, David

  1. By: Michael Naef; Alessandro Sontuoso (Philosophy, Politics and Economics, University of Pennsylvania)
    Abstract: A correlation between second-order beliefs and strategies – in social dilemmas – has been interpreted as evidence of guilt aversion (Charness and Dufwenberg [2006]). Ellingsen et al. [2010] hypothesize that such correlation might rather be due to consensus effects. Here we propose an additional explanation, conformity, which involves a similar belief-behavior correlation and we set out to tell these motivations apart by proposing a design such that: (i) we reduce the scope for guilt aversion by eliciting and transmitting beliefs about the behavior of other participants in the same role; (ii) we disentangle consensus from conformity by providing an exogenous variation in collective beliefs. The data show that consensus is present (and predominant) but is not the only force driving the belief-behavior correlation. In fact, we also observe “self-servingly conformist” behavior in that subjects choose to match their strategy to the transmitted information when it is in their interest to do so.
    Keywords: conformist preferences, consensus effects, guilt aversion, social norms, trust, experiment
    JEL: C72 C91
    Date: 2014–10
  2. By: Bethencourt, Carlos; Kunze, Lars
    Abstract: Empirical evidence suggests that family background and parental criminality are strong predictors of an individuals’ criminal behavior. The aim of this paper is to account for this intergenerational nature of criminal behavior within a simple theoretical model. Drawing on the literature of cultural transmission, we model the dynamics of moral norms of good conduct (honest behavior). Individuals’ criminal behavior and morality are strategic complementarities that reinforce each other. We establish the existence of multiple steady states and provide conditions on the socialization process under which both types - honest and dishonest - survive in the long run even though parents commit crime but at the same time agree that honesty is desirable. Our model provides a novel explanation of why crime is highly concentrated in specific areas and also why crime rates tend to be persistent over time. An empirical application reveals that our model can account for the differential reductions in property crime rates across US federal states since the 1980s.
    Keywords: crime, cultural transmission
    JEL: D91 H26 Z13
    Date: 2014–09–04
  3. By: Frühwirth-Schnatter, Sylvia (Vienna University of Economics and Business); Pamminger, Christoph (Johannes Kepler University Linz); Weber, Andrea (Universität Mannheim and WIFO); Winter-Ebmer, Rudolf (Johannes Kepler University Linz and IHS)
    Abstract: Using Bayesian Markov chain clustering analysis we investigate career paths of Austrian women after their first birth. This data-driven method allows characterizing long-term career paths of mothers over up to 19 years by transitions between parental leave, non-employment and different forms of employment. We, thus, classify women into five cluster-groups with very different long-run career costs of childbearing. We model group membership with a multinomial specification within the finite mixture model. This approach gives insights into the determinants of the long-run family gap. Giving birth late in life may lead very diverse outcomes: on the one hand, it increases the odds to drop out of labor force, and on the other hand, it increases the odds to reach a high-wage career track.
    Keywords: Fertility, timing of birth, family gap, Transition Data, Markov Chain Monte Carlo, Multinomial Logit, Panel Data
    Date: 2014–10
  4. By: Hanna, Rema (Harvard University); Wang, Shing-Yi (University of PA)
    Abstract: In this paper, we demonstrate that university students who cheat on a simple task in a laboratory setting are more likely to state a preference for entering public service. Importantly, we also show that cheating on this task is predictive of corrupt behavior by real government workers, implying that this measure captures a meaningful propensity towards corruption. Students who demonstrate lower levels of prosocial preferences in the laboratory games are also more likely to prefer to enter the government, while outcomes on explicit, two-player games to measure cheating and attitudinal measures of corruption do not systematically predict job preferences. We find that a screening process that chooses the highest ability applicants would not alter the average propensity for corruption among the applicant pool. Our findings imply that differential selection into government may contribute, in part, to corruption. They also emphasize that screening characteristics other than ability may be useful in reducing corruption, but caution that more explicit measures may offer little predictive power.
    JEL: H10 J20 O10
    Date: 2013–12
  5. By: S. Michalopoulos; A. Naghavi; G. Prarolo
    Abstract: This study explores the interaction between trade and geography in shaping the Islamic economic doctrine and in turn the comparative development of the Muslim world. We build a model where an unequal distribution of land quality in presence of trade opportunities conferred differential gains from trade across regions, fostering predatory behavior from the poorly endowed ones. We show that in such an environment it was mutually beneficial to institute an economic system of income redistribution featuring direct income transfers in return for safe passage to conduct trade. A commitment problem, however, rendered a merely static redistribution system unsustainable. Islam added a set of dynamic redistributive rules that were self-enforcing under large gains from trade and high proportions of arid land. While such principles fostered the expansion of trade within the Muslim world they limited the accumulation of wealth by the commercial elite, shaping the economic trajectory of Islamic lands in the preindustrial era.
    JEL: O10 O13 O16 O17 O18 F10 Z12
    Date: 2014–10
  6. By: Tony Fahey (School of Applied Social Science, University College Dublin)
    Abstract: Steep socio-economic gradients in family size were a major source of disparities for children in the early 20th century and prompted much social research and public commentary. By the 1960s, a scholarly consensus was emerging that SES differentials in women’s fertility in western countries were tending to narrow but developments since then have received limited attention and a children’s perspective relating to the distinct question of sibling numbers (or ‘sibsize’) has been lacking. Drawing mainly on data from the United States but with some comparative information for other western countries, this paper finds that a sharp reduction in social disparities in sibsize occurred in the final third of the twentieth century and acted as an important (though in the US case, incomplete) social leveller for children. This development is significant as a counter to other aspects of socio-demographic change in the same period which have been found to widen social inequalities for children. A key implication is that until we pay closer attention to sibsize patterns, our picture of how socio-demographic change has affected social inequalities among children in recent decades may be both incomplete and unduly negative.
    Keywords: Children, Family, Social inequality, Social stratification
    Date: 2014–10–23
  7. By: Bardsley, Nicholas; Ule, Aljaz
    Abstract: Coordination on focal points in one shot games can often be explained by team reasoning, a departure from individualistic choice theory. However, a less exotic explanation of coordination is also available based on best-responding to uniform randomisation. We test the team reasoning explanation experimentally against this alternative, using coordination games with variable losses in the off-diagonal cells. Subjects’ responses are observed when the behaviour of their partner is determined in accordance with each theory, and under game conditions where behaviour is unconstrained. The results are more consistent with the team reasoning explanation. Increasing the difficulty of the coordination tasks produces some behaviour suggestive of response to randomisation, but this effect is not pronounced.
    Keywords: coordination, team reasoning, cognitive hierarchy theory
    JEL: C91 D01
    Date: 2014
  8. By: Hirshleifer, David
    Abstract: Behavioral finance studies the application of psychology to finance, with a focus on individual-level cognitive biases. I describe here the sources of judgment and decision biases, how they affect trading and market prices, the role of arbitrage and flows of wealth between more rational and less rational investors, how firms exploit inefficient prices and incite misvaluation, and the effects of managerial judgment biases. There is need for more theory and testing of the effects of feelings on financial decisions and aggregate outcomes. Especially, the time has come to move beyond behavioral finance to social finance, which studies the structure of social interactions, how financial ideas spread and evolve, and how social processes affect financial outcomes.
    Keywords: Investor psychology, heuristics, overconfidence, attention, feelings, reference dependence, social finance
    JEL: G02 G1 G11 G14 G3
    Date: 2014–08–14

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