nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2020‒06‒15
five papers chosen by
Matthew Baker
City University of New York

  1. Functional Decision Theory in an Evolutionary Environment By Noah Topper
  2. Evolution, Heritable Risk, and Skewness Loving By Yuval Heller; Arthur Robson
  3. Modelling cultural selection on biological fitness to integrate social transmission and adaptive explanations for human behaviour By Alberto Micheletti
  4. Self-Assessment: The Role of the Social Environment By Armin Falk; Fabian Kosse; Hannah Schildberg-Hörisch; Florian Zimmermann
  5. Choice with Endogenous Categorization By Andrew Ellis; Yusufcan Masatlioglu

  1. By: Noah Topper
    Abstract: Functional decision theory (FDT) is a fairly new mode of decision theory and a normative viewpoint on how an agent should maximize expected utility. The current standard in decision theory and computer science is causal decision theory (CDT), largely seen as superior to the main alternative evidential decision theory (EDT). These theories prescribe three distinct methods for maximizing utility. We explore how FDT differs from CDT and EDT, and what implications it has on the behavior of FDT agents and humans. It has been shown in previous research how FDT can outperform CDT and EDT. We additionally show FDT performing well on more classical game theory problems and argue for its extension to human problems to show that its potential for superiority is robust. We also make FDT more concrete by displaying it in an evolutionary environment, competing directly against other theories.
    Date: 2020–05
  2. By: Yuval Heller; Arthur Robson
    Abstract: Our understanding of risk preferences can be sharpened by considering their evolutionary basis. The existing literature has focused on two sources of risk: idiosyncratic risk and aggregate risk. We introduce a new source of risk, heritable risk, in which there is a positive correlation between the fitness of a newborn agent and the fitness of her parent. Heritable risk was plausibly common in our evolutionary past and it leads to a strictly higher growth rate than the other sources of risk. We show that the presence of heritable risk in the evolutionary past may explain the tendency of people to exhibit skewness loving today.
    Date: 2020–05
  3. By: Alberto Micheletti (IAST - Institute of Advanced Studies in Toulouse)
    Abstract: One of the difficulties with cultural group selection theory highlighted in the review by Smith (2020, Evol. Hum. Sci., 2, e7) is its inability to separate the evolutionary effects of selection of cultural traits based on biological fitness (Cultural Selection 1) from the effects of selection based on cultural fitness (Cultural Selection 2). Confusing these two processes can hinder the integration of adaptive explanations for human behaviour, which focus on biological fitness, and cultural evolution explanations, which often focus on social transmission. Recent empirical work is starting to bridge this gap, but progress in mathematical modelling has been considerably slower. Here, I suggest that modellers can contribute to achieving this integration by further developing models of Cultural Selection 1, where behaviours are influenced by culturally inherited traits selected on the basis of their effects on biological fitness. These models should build on existing social evolution theory methods and replace genetic relatedness with cultural relatedness, that is the probability that two individuals share a cultural variant.
    Date: 2020–04–23
  4. By: Armin Falk; Fabian Kosse; Hannah Schildberg-Hörisch; Florian Zimmermann
    Abstract: This study presents descriptive and causal evidence on the role of the social environment in shaping the accuracy of self-assessment. We introduce a novel incentivized measurement tool to measure the accuracy of self-assessment among children and use this tool to show that children from high socioeconomic status (SES) families are more accurate in their self-assessment, compared to children from low SES families. To move beyond correlational evidence, we then exploit the exogenous variation of participation in a mentoring program designed to enrich the social environment of children. We document that the mentoring program has a causal positive effect on the accuracy of children’s self-assessment. Finally, we show that the mentoring program is most effective for children whose parents provide few social and interactive activities for their children.
    Keywords: Self-Assessment, Beliefs, Experiments, Randomized Intervention, Children
    JEL: D03 C21 C91 I24
    Date: 2020–05
  5. By: Andrew Ellis; Yusufcan Masatlioglu
    Abstract: We propose a novel categorical thinking model (CTM) where the framing of the decision problem affects how the agent categorizes each product, and the product's category affects her evaluation of the product. We show that a number of prominent models of salience, status quo bias, loss-aversion, inequality aversion, and present bias all fit under the umbrella of CTM. This suggests categorization as an underlying mechanism for key departures from the neoclassical model of choice and an account for diverse sets of evidence that are anomalous from its perspective. We specialize CTM to provide a behavioral foundation for the salient thinking model of Bordalo et al. (2013), highlighting its strong predictions and distinctions from other existing models.
    Date: 2020–05

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