nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2020‒12‒21
ten papers chosen by
Matthew Baker
City University of New York

  1. Decision making in Economics -- a behavioral approach By Amitesh Saha
  2. Ethnicity and gender influence the decision making in a multinational state: The case of Russia By Tatiana Kozitsina; Anna Mikhaylova; Anna Komkova; Anastasia Peshkovskaya; Anna Sedush; Olga Menshikova; Mikhail Myagkov; Ivan Menshikov
  3. Gender Stereotypes Can Explain the Gender-Equality Paradox By Breda, Thomas; Jouini, Elyès; Napp, Clotilde; Thebault, Georgia
  4. Celestial enlightenment: eclipses, curiosity and economic development among pre-modern ethnic groups By Anastasia Litina; Èric Roca Fernández
  5. How Africans shaped British colonial institutions: evidence from local taxation By Bolt, Jutta; Gardner, Leigh
  6. Savage's response to Allais as Broomean reasoning By Franz Dietrich; Antonios Staras; Robert Sugden
  7. Does size matter? The Allais paradox and preference reversals with varying outcome magnitudes By Oliver, Adam; Sunstein, Cass
  8. Covert signaling is an adaptive communication strategy in diverse populations By Smaldino, Paul E.; Turner, Matthew Adam
  9. A comparison of wealth inequality in humans and non-humans By Ivan Chase; Raphaël Douady; Dianna Padilla
  10. Depth of Reasoning Models with Sophisticated Agents By Peter G Moffatt; Ganna Pogrebna; Graciela Zevallos-Porles

  1. By: Amitesh Saha
    Abstract: We review economic research regarding the decision making processes of individuals in economics, with a particular focus on papers which tried analyzing factors that affect decision making with the evolution of the history of economic thought. The factors that are discussed here are psychological, emotional, cognitive systems, and social norms. Apart from analyzing these factors, it deals with the reasons behind the limitations of rational decision-making theory in individual decision making and the need for a behavioral theory of decision making. In this regard, it has also reviewed the role of situated learning in the decision-making process.
    Date: 2020–12
  2. By: Tatiana Kozitsina (Babkina); Anna Mikhaylova; Anna Komkova; Anastasia Peshkovskaya; Anna Sedush; Olga Menshikova; Mikhail Myagkov; Ivan Menshikov
    Abstract: Individuals' behavior in economic decisions depends on such factors as ethnicity, gender, social environment, personal traits. However, the distinctive features of decision making have not been studied properly so far between indigenous populations from different ethnicities in a modern and multinational state like the Russian Federation. Addressing this issue, we conducted a series of experiments between the Russians in Moscow (the capital of Russia) and the Yakuts in Yakutsk (the capital of Russian region with the mostly non-Russian residents). We investigated the effect of socialization on participants' strategies in the Prisoner's Dilemma game, Ultimatum game, and Trust game. At the baseline stage, before socialization, the rates of cooperation, egalitarianism, and trust for the Yakuts are higher than for the Russians in groups composed of unfamiliar people. After socialization, for the Russians all these indicators increase considerably; whereas, for the Yakuts only the rate of cooperation demonstrates a rising trend. The Yakuts are characterized by relatively unchanged indicators regardless of the socialization stage. Furthermore, the Yakutsk females have higher rates of cooperation and trust than the Yakuts males before socialization. After socialization, we observed the alignment in indicators for males and females both for the Russians and for the Yakuts. Hence, we concluded that cultural differences can exist inside one country despite the equal economic, politic, and social conditions.
    Date: 2020–12
  3. By: Breda, Thomas (Paris School of Economics); Jouini, Elyès (Université Paris-Dauphine); Napp, Clotilde (CNRS); Thebault, Georgia (Paris School of Economics)
    Abstract: The so-called "gender-equality paradox" is the fact that gender segregation across occupations is more pronounced in more egalitarian and more developed countries. Some scholars have explained this paradox by the existence of deeply rooted or intrinsic gender differences in preferences that materialize more easily in countries where economic constraints are more limited. In line with a strand of research in sociology, we show instead that it can be explained by cross-country differences in essentialist gender norms regarding math aptitudes and appropriate occupational choices. To this aim, we propose a measure of the prevalence and extent of internalization of the stereotype that "math is not for girls" at the country level. This is done using individual-level data on the math attitudes of 300,000 15-year-old female and male students in 64 countries. The stereotype associating math to men is stronger in more egalitarian and developed countries. It is also strongly associated with various measures of female underrepresentation in math intensive fields and can therefore entirely explain the gender-equality paradox. We suggest that economic development and gender equality in rights go hand-in-hand with a reshaping rather than a suppression of gender norms, with the emergence of new and more horizontal forms of social differentiation across genders.
    Keywords: gender equality, stereotypes, female underrepresentation in math
    JEL: I24 I25 J16
    Date: 2020–11
  4. By: Anastasia Litina (University of Macedonia); Èric Roca Fernández (Aix-Marseille Univ, CNRS, AMSE, Marseille, France.)
    Abstract: This paper revisits the role of human capital for economic growth among pre-modern ethnic groups. We hypothesise that exposure to rare natural events drives curiosity and prompts thinking in an attempt to comprehend and explain the phenomenon, thus raising human capital and, ultimately, pre-modern growth. We focus on solar eclipses as one particular trigger of curiosity and empirically establish a robust relationship between their number and several proxies for economic prosperity: social complexity, technological level and population density. Variation in solar eclipse exposure is exogenous as their local incidence is randomly and sparsely distributed all over the globe. Additionally, eclipses' non-destructive character makes them outperform other uncanny natural events, such as volcano eruptions or earthquakes, which have direct negative economic effects. We also offer evidence compatible with the human capital increase we postulate, finding a more intricate thinking process in ethnic groups more exposed to solar eclipses. In particular, we study the development of written language, the playing of strategy games and the accuracy of the folkloric reasoning for eclipses.
    Keywords: eclipses, human capital, development, curiosity
    JEL: N10 N30 E02 O10 O50 Z10
    Date: 2020–12
  5. By: Bolt, Jutta; Gardner, Leigh
    Abstract: The institutions that governed most of the rural population in British colonial Africa have been neglected in the literature on colonialism. We use new data on local governments, or "Native Authorities,"to present the first quantitative comparison of African institutions under indirect rule in four colonies in 1948: Nigeria, the Gold Coast, Nyasaland, and Kenya. Tax data show that Native Authorities' capacity varied within and between colonies, due to both underlying economic inequalities and African elites' relations with the colonial government. Our findings suggest that Africans had a bigger hand in shaping British colonial institutions than often acknowledged.
    Keywords: ES/R005753
    JEL: N0
    Date: 2020–10–02
  6. By: Franz Dietrich (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics, CNRS - Centre National de la Recherche Scientifique); Antonios Staras (Cardiff University); Robert Sugden (UEA - University of East Anglia [Norwich])
    Abstract: Leonard Savage famously contravened his own theory when first confronting the Allais Paradox, but then convinced himself that the had made an error. We examine the formal structure of Savage's ‘error-correcting' reasoning in the light of (i) behavioural economists' claims to identify the latent preferences of individuals who violate conventional rationality requirements and (ii) John Broome's critique of arguments which presuppose that rationality requirements can be achieved through reasoning. We argue that Savage's reasoning is not vulnerable to Broome's critique, but does not provide support for the view that behavioural scientists can identify and counteract errors in people's choices.
    Keywords: behavioural economics,reasoning,rationality,Broome,Allais Paradox,Savage
    Date: 2020
  7. By: Oliver, Adam; Sunstein, Cass
    Abstract: The common consequence effect and preference reversals are two of the foundational violations of the standard model of rational choice (i.e. von Neumann – Morgenstern expected utility theory) and, as such, played an important role in the development of empirical behavioural economics. One can hypothesise, however, that due to varying degrees of risk aversion when faced with outcomes of different magnitude, the rate of both of these violations may vary with outcome size. Using various types of outcome, this article reports tests of these violations using different outcome magnitudes in within-respondent designs. The results observed are broadly consistent across outcome type: the common consequence effect, while rarely being substantially observed in any of the tests undertaken, was often found to be somewhat susceptible to outcome size while preference reversals, which were everywhere substantially observed, were not. In and of itself, the observation of systematic preference reversals implies that preferences are often constructed according to the way in which questions are asked, and is sufficient to question the usefulness of stated preference techniques for informing public policy.
    Keywords: Allais paradox; common consequence effect; expected utility theory; outcome size; preference elicitation; preference reversals; rational choice
    JEL: J1
    Date: 2019–02–01
  8. By: Smaldino, Paul E.; Turner, Matthew Adam
    Abstract: Identity signals are those common components of communication transmissions that inform receivers of the signaler’s membership (or non-membership) in a subset of individuals. Such signals may be overt, broadcast to all possible receivers, or covert, encrypted so that only similar receivers are likely to perceive their identity-relevant meaning. Here we present an instrumental theory of covert signaling, based on the function of identity signals in social assortment. We argue that covert signaling is favored when signalers are generous toward strangers, when costs of being discovered as dissimilar are high, and when the ability to assort only with preferred partners is restricted. We further argue that covert signaling should be more common among members of "invisible" minorities, who are less likely to encounter similar individuals by chance. We formalize this theory with an evolutionary model to more rigorously explore the consequences of our assumptions. Our results have implications for our understanding of numerous aspects of social life, including communication, cooperation, social identity, humor, pragmatics, politics, hate speech, and the maintenance of diversity.
    Date: 2020–12–02
  9. By: Ivan Chase; Raphaël Douady (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Dianna Padilla
    Abstract: HIGHLIGHTS • We present the first description of "wealth" inequality in a non-human animal • We describe the distribution of snail shells occupied by a hermit crab species • The distribution of shells resembles the common form of human wealth distributions • Hermit crabs may provide an animal model of the dynamics generating wealth inequality • Shell distribution in hermit crabs provides a baseline to compare to human inequality
    Date: 2020–01
  10. By: Peter G Moffatt (School of Economics, University of East Anglia, Norwich.); Ganna Pogrebna (The Alan Turing Institute, The University of Sydney); Graciela Zevallos-Porles (School of Economics, University of East Anglia, Norwich.)
    Abstract: In the context of guessing games, we propose the Sophisticated Reasoning Model (SRM) which includes a “sophisticated†type. A parameter ps represents the proportion of sophisticated players in the population. Asophisticated player is one who forms a belief (eps) of the proportion of the population who are sophisticated (following the same cognitive process as themselves) and best responds to this belief. The model nests the standard Level-k and cognitive hierarchy models (when eps = 0) and also Nash behaviour (when eps = 1). Moreover, a sophisticated player with correct beliefs (eps = ps) has best response equal to the winning guess. The model is extended to allow heterogeneity in beliefs. When applied to field data from a guessing game, only 9% of players are estimated to be sophisticated, but these players greatly over-estimate the proportion who are of the same type. This is interpreted as a manifestation of the Dunning-Kruger effect.
    Keywords: Beauty contest game; Sophisticated reasoning model; Level k-model; Cognitive hierarchy model; Dunning-Kruger effect.
    Date: 2020–12

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