nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2016‒07‒30
five papers chosen by
Matthew Baker
City University of New York

  1. "Trust and Communication in a Property Rights Dilemma" By T.K Ahn; Loukas Balafoutas; Mongoljin Batsaikhan; Francisco Campos Ortiz; Louis Putterman; Matthias Sutter
  2. Conventional Contracts, Intentional behavior and Logit Choice: Equality Without Symmetry By Hwang, Sung-Ha; Lim, Wooyoung; Neary, Philip; Newton, Jonathan
  3. Inclusive Fitness By Matthijs van Veelen; Benjamin Allen; Moshe Hoffman; Burton Simon; Carl Veller
  4. Does empathy Beget Guile? By Chen, Daniel L.
  5. A needs theory of governance By Silvia Sacchetti; Ermanno Tortia

  1. By: T.K Ahn; Loukas Balafoutas; Mongoljin Batsaikhan; Francisco Campos Ortiz; Louis Putterman; Matthias Sutter
    Abstract: A vibrant literature has emerged in recent years to explore the influences of human evolution and the genetic composition of populations on the comparative economic performance of societies, highlighting the roles played by the Neolithic Revolution and the prehistoric “out of Africa” migration of anatomically modern humans in generating worldwide variations in the composition of genetic traits across populations. The recent attempt by Nicholas Wade’s A Troublesome Inheritance: Genes, Race and Human History to expose the evolutionary origins of comparative economic development to a wider audience provides an opportunity to review this important literature in the context of his theory.
    Date: 2016
  2. By: Hwang, Sung-Ha; Lim, Wooyoung; Neary, Philip; Newton, Jonathan
    Abstract: When coordination games are played under the logit choice rule and there is intentional bias in agents’ non-best response behavior, the Egalitarian bargaining solution emerges as the long run social norm. Without intentional bias, a new solution, the Logit bargaining solution emerges as the long run norm. These results contrast with results under non-payoff dependent deviations from best response behavior, where it has previously been shown that the Kalai-Smorodinsky and Nash bargaining solutions emerge as long run norms. Experiments on human subjects suggest that non-best response play is payoff dependent and displays intentional bias. This suggests the Egalitarian solution as the most likely candidate for a long run bargaining norm.
    Keywords: Evolution; Nash program; Logit choice; Egalitarianism
    Date: 2016–07
  3. By: Matthijs van Veelen (University of Amsterdam, the Netherlands); Benjamin Allen (Emmanuel College, Boston, United States); Moshe Hoffman (Rady School of Management, UC San Diego, United States); Burton Simon (University of Colorado, Denver, United States); Carl Veller (Harvard University, Cambridge, United States)
    Abstract: This paper reviews and addresses a variety of issues relating to inclusive fitness. The main question is: are there limits to the generality of inclusive fitness, and if so, what are the perimeters of the domain within which inclusive fitness works? This question is addressed using two well known tools from evolutionary theory: the replicator dynamics, and adaptive dynamics. Both are combined with population structure. How generally Hamilton's rule applies depends on how costs and benefits are defined. We therefore consider costs and benefits following from Karlin & Matessi's (1983) "counterfactual method", and costs and benefits as defined by the "regression method" (Gardner et al., 2011). With the latter definition of costs and benefits, Hamilton's rule always indicates the direction of selection correctly, and with the former it does not. How these two definitions can meaningfully be interpreted is also discussed. We also consider cases where the qualitative claim that relatedness fosters cooperation holds, even if Hamilton's rule as a quantitative prediction does not. We furthermore find out what the relation is between Hamilton's rule and Fisher's Fundamental Theorem of Natural Selection. We also consider cancellation effects - which is the most important deepening of our understanding of when altruism is selected for - and we discuss preference evolution. Finally we also explore the remarkable (im)possibilities for empirical testing with either definition of costs and benefits in Hamilton's rule.
    Keywords: Inclusive fitness; Hamilton's rule; Fisher's fundamental theorem of natural selection; replicator dynamics; adaptive dynamics; regression method; counterfactual method; preference evolution; empirical test; comparative statics
    JEL: C73
    Date: 2016–07–26
  4. By: Chen, Daniel L.
    Abstract: Some theories about the positive impact of markets on morality suggest that competition increases empathy, not between competitors, but between them and third parties. However, empathy may be a necessary evolutionary antecedent to guile, which is when someone knows what the other person wants and intentionally deceives him or her, and deception may have evolved as a means of exploiting empathy. This paper examines how individuals primed for empathy behave towards third parties in a simple economic game of deception. It reports the results of a data entry experiment in an online labor market. Individuals enter data randomized to be a prime for empathy, for guile, or a control. Empathy is then measured using a Reading the Mind in the Eyes Test and guile is measured using a simple economic game. Individuals primed for empathy become less deceptive towards third parties. Individuals primed for guile become less likely to perceive that deceiving an individual is unfair in a vignette. These results are robust to a variety of controls and to restricting to workers who entered the prime accurately. These findings are inconsistent with the hypothesis that empathy causes guile and suggests that empathy may cause those who are making judgements to become less deceptive.
    Keywords: Normative Commitments, Other-Regarding Preferences, Empathy, Deception, Guile
    JEL: D03 D64 K00
    Date: 2016–07
  5. By: Silvia Sacchetti (The Open University); Ermanno Tortia (University of Trento)
    Abstract: New-institutional economics hypothesizes imperfect rationality, self-seeking preferences, monetary-related needs, and opportunism as fundamental features of human behavior. Consistently, new-institutionalist models of governance highlight the efficiency and transaction costs minimizing features of control rights and governance. Differently, needs theory of governance, as here presented, hypothesizes imperfect rationality, multiple needs, and reciprocity, in which case opportunism is reduced to an exception to individual behavior. Consistently, it presents a theory that links production governance with the wellbeing of those partaking in production. Building on Maslow’s human psychology, the governance model suggested in this paper is aimed at evidencing the self-actualization potential of control rights, organizational structures and practices. The application of Maslow’s theory to the institutional structure of organizations suggests that the deepest organizational layers (control rights and governance) broadly correspond to the most basic needs in Maslow’s theory (survival, security and belonging), while the outer layers (managerial models and employment relations) correspond to the fulfillment of the highest needs (self-esteem and self-actualization). Cooperative firms are used as an illustration of governance solutions consistent with needs theory in human psychology
    Keywords: new-institutional economics; opportunism; governance; needs theory; human psychology; self-fulfillment; cooperative firms; inclusive governance
    Date: 2016–07

This nep-evo issue is ©2016 by Matthew Baker. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.