nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2016‒10‒23
seven papers chosen by
Matthew Baker
City University of New York

  1. Mentalism Versus Behaviourism in Economics: A Philosophy-of-Science Perspective By Franz Dietrich; Christian List
  2. Parental Control and Fertility History By Michele Tertilt; Alice Schoonbroodt
  3. The cultural diffusion of the fertility transition: evidence from internal migration in 19 th century France By Guillaume Daudin; Raphaël Franck; Hillel Rapoport
  4. What Makes a Good Trader? On the Role of Intuition and Reflection on Trader Performance By Brice Corgnet; Mark Desantis; David Porter
  5. Is the market really a good teacher ? By Pascal Seppecher; Isabelle Salle; Dany Lang
  6. Fertility and HIV risk in Africa By Yao, Yao
  7. Undoing Gender with Institutions. Lessons from the German Division and Reunification By Quentin Lippmann; Alexandre Georgieff; Claudia Senik

  1. By: Franz Dietrich (PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Christian List (LSE - London School of Economics and Political Science)
    Abstract: Behaviourism is the view that preferences, beliefs, and other mental states in social-scientific theories are nothing but constructs re-describing people's behaviour. Mentalism is the view that they capture real phenomena, on a par with the unobservables in science, such as electrons and electromagnetic fields. While behaviourism has gone out of fashion in psychology, it remains influential in economics, especially in 'revealed preference' theory. We defend mentalism in economics, construed as a positive science, and show that it fits best scientific practice. We distinguish mentalism from, and reject, the radical neuroeconomic view that behaviour should be explained in terms of brain processes, as distinct from mental states.
    Keywords: decision theory,scientific realism,Mentalism,behaviourism,revealed preference
    Date: 2016–04–21
  2. By: Michele Tertilt (University of Mannheim); Alice Schoonbroodt (The University of Iowa)
    Abstract: Parental control over offspring has changed dramatically in Western societies. From a state, before the 19th century, where parents completely controlled their children far into adulthood, a series of laws have shifted these control rights to the current state where even younger children control many aspects of their own lives. We first document the laws that gave parents all the control and argue that these control rights, directly or indirectly, gave parents access to a large fraction of their offspring’s labor income if they so desired. This paper argues that the shift in property rights that followed has important implications for fertility choice. In a simple overlapping generations model with endogenous fertility and altruism, we show that the first-order effect of such a shift is a decrease in fertility—contributing to the decline in fertility during the demographic transition. Depending on the cost structure of children, this decrease may be followed by an increase in fertility, exacerbated by the introduction of pay-as-you-go social security in the 1930s—a confounding factor to generate the baby boom in the 1950s and 1960s.
    Date: 2016
  3. By: Guillaume Daudin (LEDa - Laboratoire d'Economie de Dauphine - Université Paris-Dauphine); Raphaël Franck (Bar-Ilan University - Bar-Ilan University [Israël]); Hillel Rapoport (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)
    Abstract: France experienced the demographic transition before richer and more educated countries. This paper offers a novel explanation for this puzzle that emphasizes the diffusion of culture and information through internal migration. It tests how migration affected fertility by building a decennial bilateral migration matrix between French regions for 1861-1911. The identification strategy uses exogenous variation in transportation costs resulting from the construction of railways. The results suggest the convergence towards low birth rates can be explained by the diffusion of low-fertility norms by migrants, especially by migrants to and from Paris.
    Keywords: Fertility,France,Demographic Transition,Migration
    Date: 2016–05
  4. By: Brice Corgnet (EMLYON Business school - EMLYON Business School, GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - Centre National de la Recherche Scientifique - UCBL - Université Claude Bernard Lyon 1 - UL2 - Université Lumière - Lyon 2 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - ENS Lyon - École normale supérieure - Lyon); Mark Desantis (Chapman University - Chapman University, Argyros School of Business and Economics); David Porter (Argyros School of Business and Economics, Chapman University - Chapman University)
    Abstract: Using simulations and experiments, we pinpoint two main drivers of trader performance: cognitive reflection and theory of mind. Both dimensions facilitate traders' learning about asset valuation. Cognitive reflection helps traders use market signals to update their beliefs whereas theory of mind offers traders crucial hints on the quality of those signals. We show these skills to be complementary because traders benefit from understanding the quality of market signals only if they are capable of processing them. Cognitive reflection relates to previous Behavioral Finance research as it is the best predictor of a trader's ability to avoid commonly-observed behavioral biases.
    Keywords: Experimental asset markets, behavioral finance, cognitive reflection, theory of mind, financial education
    Date: 2016
  5. By: Pascal Seppecher (CEPN - Centre d'Economie de l'Université Paris Nord - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique, GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - CNRS - Centre National de la Recherche Scientifique); Isabelle Salle (CeNDEF - Center for Nonlinear Dynamics in Economics and Finance - Universiteit van Amsterdam, Utrecht School of Economics - Utrecht University [Utrecht]); Dany Lang (CEPN - Centre d'Economie de l'Université Paris Nord - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper proposes to model market mechanisms as a collective learning process for firms in a complex adaptive system, namely Jamel, an agent-based, stock-flow consistent macroeconomic model. Inspired by Alchian's (1950) " blanketing shotgun process " idea, our learning model is an ever-adapting process that puts a significant weight on exploration vis-à-vis exploitation. We show that decentralized market selection allows firms to collectively adapt their overall debt strategies to the changes in the macroeconomic environment so that the system sustains itself, but at the cost of recurrent deep downturns. We conclude that, in complex evolving economies, market processes do not lead to the selection of optimal behaviors, as the characterization of successful behaviors itself constantly evolves as a result of the market conditions that these behaviors contribute to shape. Heterogeneity in behavior remains essential to adaptation in such an ever-changing environment. We come to an evolutionary characterization of a crisis, as the point where the evolution of the macroeconomic system becomes faster than the adaptation capabilities of the agents that populate it, and the so far selected performing behaviors suddenly cease to be, and become instead undesirable.
    Keywords: Firm adaptation,Learning,Evolutionary Economics
    Date: 2016–04–28
  6. By: Yao, Yao
    Abstract: This paper examines the role of social and cultural norms regarding fertility in women’s HIV risk in Sub-Saharan Africa. Fertility, or the ability to bear children, is highly valued in most African societies, and premarital fertility is often encouraged in order to facilitate marriage. This, however, increases women’s exposure to HIV risk by increasing unprotected premarital sexual activity. I construct a lifecycle model that relates a woman’s decisions concerning sex, fertility and education to HIV risk. The model is calibrated to match Kenyan women’s data on fertility, marriage and HIV prevalence. Quantitative results show that fertility motives play a substantial role in women’s, especially young women’s, HIV risk. If premarital births did not facilitate marriage, the HIV prevalence rate of young women in Kenya would be one-third lower. Policies that subsidize income, education, and HIV treatment are evaluated. I find that education subsidy would reduce young women’s HIV risk most effectively by raising the opportunity cost of premarital childrearing.
    Keywords: HIV, Fertility, Africa, Women's health,
    Date: 2016
  7. By: Quentin Lippmann (PSE - Paris School of Economics); Alexandre Georgieff (PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), PSE - Paris School of Economics); Claudia Senik (PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), PSE - Paris School of Economics, UP4 - Université Paris-Sorbonne)
    Abstract: Social scientists have provided empirical evidence that "gender trumps money", in the sense that gender norms can be more powerful then economic rationality in shaping daily arrangements between spouses. In particular, it has been shown that when they deviate from the "male breadwinner" norm, women react by "doing gender", i.e. overplaying their feminine role by increasing the number of housework hours that they accomplish. It has also been shown that the risk of divorce increases when a woman earns more than her husband. This paper shows that, however powerful, these norms are cultural and can be trumped by institutions. We use the 41-year division of Germany as a natural experiment and look at differences between East and West Landers in terms of gender behavior after the German reunification. As most countries of the socialist bloc, the former GDR had designed institutions that were much more gender equalizing than their counterpart in the former FRG. We show that these institutions have created a culture that keeps influencing behavior up to the current period. In particular, East Germany differs from West Germany in the sense that a woman can earn more than her husband without "doing gender" and without putting her marriage at risk.
    Keywords: Gender norms,Culture,Institutions,German Division,Household economics
    Date: 2016–04

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