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on Evolutionary Economics |
| By: | Jean-Francois Mercure |
| Abstract: | Knowledge acquisition by consumers is a key process in the diffusion of innovations. However, in standard theories of the representative agent, agents do not learn and innovations are adopted instantaneously. Here, we show that in a discrete choice model where utility-maximising agents with heterogenous preferences learn about products through peers, their stock of knowledge on products becomes heterogenous, fads and fashions arise, and transitivity in aggregate preferences is lost. Non-equilibrium path-dependent dynamics emerge, the representative agent exhibits behavioural rules different than individual agents, and aggregate utility cannot be optimised. Instead, an evolutionary theory of product innovation and diffusion emerges. |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1607.04155&r=evo |
| By: | Luca Rigotti |
| Abstract: | We provide evidence on how cooperation rates vary across payoff parameters in the Prisoner’s Dilemma (PD), using four one-shot games that differ only in the payoffs from mutual cooperation. In our experiment, participants play only the PD game, and play the game once and only once, so there are no potential confounds or methodological issues. Our results show that higher monetary payoffs from cooperation are associated with substantially higher cooperation rates, which increase monotonically from 23% to 60%. Participants’ beliefs about cooperation rates track closely actual cooperation rates: higher cooperation is expected from others when mutual cooperation payoffs are higher. This is true also for participants who, in a follow-up experiment, only make guesses about the choices of others. |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:pit:wpaper:5877&r=evo |
| By: | Klaus Wälde (Johannes Gutenberg-University Mainz) |
| Abstract: | Emotions were central to the development of economics, especially in utility theory in classical economics. While neoclassical utility theory basically abolished emotions, behavioural economics more recently reintroduced emotions in utility theory. Beyond utility theory, economic theorists use emotions to explain behaviour which otherwise could not be understood or they study emotions out of interest for the emotion itself. While some analyses display a strong overlap between psychological thinking and economic modelling, in most cases there is still a large gap between economic and psychological approaches to emotion research. Ways how to reduce this gap are discussed. |
| Keywords: | utility theory, ex-ante emotions, immediate emotions, ex-post emotions belief-based emotions, regret, desire, stress, anxiety, guilt |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:jgu:wpaper:1611&r=evo |
| By: | Igor V. EVSTIGNEEV (University of Manchester); Thorsten HENS (University of Zürich and Swiss Finance Institute); Klaus Reiner SCHENK-HOPPÉ (University of Manchester) |
| Abstract: | The paper reviews a new research field that develops evolutionary and behavioural approaches for the modeling of financial markets. The main objective is to create a plausible alternative to the conventional Walrasian equilibrium theory based on the hypothesis of full rationality of market players. Rather than maximizing typically unobservable individual utility functions, traders/investors are permitted to have a whole variety of patterns of strategic behaviour depending on their individual psychology. The models considered in this field combine elements of evolutionary game theory (solution concepts) and stochastic dynamic games (strategic frameworks). |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp1516&r=evo |
| By: | Antoci, Angelo; Delfino, Alexia; Paglieri, Fabio; Panebianco, Fabrizio; Sabatini, Fabio |
| Abstract: | Evidence is growing that forms of incivility –e.g. aggressive and disrespectful behaviors, harassment, hate speech and outrageous claims– are spreading in the population of social networking sites’ (SNS) users. Online social networks such as Facebook allow users to regularly interact with known and unknown others, who can behave either politely or rudely. This leads individuals not only to learn and adopt successful strategies for using the site, but also to condition their own behavior on that of others. Using a mean field approach, we define an evolutionary game framework to analyse the dynamics of civil and uncivil ways of interaction in online social networks and their consequences for collective welfare. Agents can choose to interact with others –politely or rudely– in SNS, or to opt out from online social networks to protect themselves from incivility. We find that, when the initial share of the population of polite users reaches a critical level, civility becomes generalized if its payoff increases more than that of incivility with the spreading of politeness in online interactions. Otherwise, the spreading of self-protective behaviors to cope with online incivility can lead the economy to non-socially optimal stationary states. |
| Keywords: | online incivility; evolutionary dynamics; self-protective behavior; social networks; dynamics of social interaction; social networking sites; Internet. |
| JEL: | C61 C63 D85 O3 O33 Z13 |
| Date: | 2016–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:72454&r=evo |
| By: | Peter Jevtic (Department of Mathematics and statistics, McMaster University, Canada); Luca Regis (IMT School for Advanced Studies Lucca) |
| Abstract: | We formulate, study and calibrate a continuous-time model for the joint evolution of the mortality surface of multiple populations. We model the mortality intensity by age and population as a mixture of stochastic latent factors, that can be either population-specific or common to all populations. These factors are described by affine time-(in)homogenous stochastic processes. Traditional, deterministic mortality laws can be extended to multi-population stochastic counterparts within our framework. We detail the calibration procedure when factors are Gaussian, using centralized data-fusion Kalman filter. We provide an application based on the mortality of UK males and females. Although parsimonious, the specification we calibrate provides a good fit of the observed mortality surface (ages 0-99) of both sexes between 1960 and 2013. |
| Keywords: | multi-population mortality, mortality surface, continuous-time stochastic mortality, Kalman filter estimation, centralized data fusion |
| JEL: | C13 C38 G22 J11 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:ial:wpaper:03/2016&r=evo |
| By: | Angie ANDRIKOGIANNOPOULOU (University of Geneva and Swiss Finance Institute); Filippos PAPAKONSTANTINOU (Imperial College London) |
| Abstract: | We use trading data from a sports wagering market to estimate individual risk preferences within the prospect-theory paradigm. The experimental-like features of this market greatly facilitate the estimation of risk preferences, while our long panel enables us to study whether preferences vary across individuals and depend on earlier outcomes. Our estimates i) extend support for existing experimental findings --- mild utility curvature, moderate loss aversion, and probability overweighting of extreme outcomes --- to a real market setting that shares similarities with traditional financial markets, ii) reveal that risk attitude is widely heterogeneous and history-dependent, and iii) indicate that prospect theory can better explain the prevalence of the disposition effect than previously thought. |
| Keywords: | Risk Preferences, State Dependence, History Dependence, Heterogeneity, Prospect Theory, Disposition Effect |
| JEL: | D03 D12 D14 D81 G02 G11 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp1511&r=evo |