nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2023‒01‒16
six papers chosen by
Matthew Baker
City University of New York

  1. On Blockchain We Cooperate: An Evolutionary Game Perspective By Luyao Zhang; Xinyu Tian
  2. Norm-signalling punishment By Daniele Nosenzo; Erte Xiao; Nina Xue
  3. On the Development of Cooperative and Antagonistic Relationships in Public Good Environments. A Model-Based Experimental Study By Loerakker, Ben; Bault, Nadège; Hoyer, Maximilian; van Winden, Frans
  4. Inequality and social cohesion in Africa: Theoretical insights and an exploratory empirical investigation By Burchi, Francesco; Zapata-Román, Gabriela
  5. On the Origin and Persistence of Identity-Driven Choice Behavior By Liqui Lung, C. W.; ; ;
  6. Historical roots, cultural selection and the ‘New World Order’ By Miller, Marcus

  1. By: Luyao Zhang; Xinyu Tian
    Abstract: Cooperation is fundamental for human prosperity. Blockchain, as a trust machine, is a cooperative institution in cyberspace that supports cooperation through distributed trust with consensus protocols. While studies in computer science focus on fault tolerance problems with consensus algorithms, economic research utilizes incentive designs to analyze agent behaviors. To achieve cooperation on blockchains, emerging interdisciplinary research introduces rationality and game-theoretical solution concepts to study the equilibrium outcomes of various consensus protocols. However, existing studies do not consider the possibility for agents to learn from historical observations. Therefore, we abstract a general consensus protocol as a dynamic game environment, apply a solution concept of bounded rationality to model agent behavior, and resolve the initial conditions for three different stable equilibria. In our game, agents imitatively learn the global history in an evolutionary process toward equilibria, for which we evaluate the outcomes from both computing and economic perspectives in terms of safety, liveness, validity, and social welfare. Our research contributes to the literature across disciplines, including distributed consensus in computer science, game theory in economics on blockchain consensus, evolutionary game theory at the intersection of biology and economics, bounded rationality at the interplay between psychology and economics, and cooperative AI with joint insights into computing and social science. Finally, we discuss that future protocol design can better achieve the most desired outcomes of our honest stable equilibria by increasing the reward-punishment ratio and lowering both the cost-punishment ratio and the pivotality rate.
    Date: 2022–12
  2. By: Daniele Nosenzo (Aarhus Univeristy, Denmark); Erte Xiao (Department of Economics, Monash University); Nina Xue (Department of Economics, Monash University)
    Abstract: The literature on punishment and prosocial behavior has presented conflicting findings. In some settings, punishment crowds out prosocial behavior and backfires; in others, however, it promotes prosociality. We examine whether the punisher’s motives can help reconcile these results through a novel experiment in which the agent’s outcomes are identical in two environments, but in one punishment is self-serving (i.e., potentially benefits the punisher) while in the other it is other-regarding (i.e., potentially benefits a third party). We find that self-regarding punishment reduces the social stigma of selfish behavior, while other-regarding punishment does not. As a result, self-serving punishment is less effective at encouraging compliance and is more likely to backfire compared to other-regarding punishment. Our findings have implications for the design of punishment mechanisms and highlight the importance of the punisher’s motives in the norm-signalling function of punishment.
    Keywords: punishment, norms, stigma, crowd out, experiment
    JEL: D02
    Date: 2022–12
  3. By: Loerakker, Ben; Bault, Nadège (University of Plymouth); Hoyer, Maximilian; van Winden, Frans
    Abstract: The importance of prosocial behavior is currently widely acknowledged. This not only holds for the social sciences, including economics, but also the life sciences where this kind of behavior is observed across the evolutionary ladder. Evolutionary continuity consequently suggests that caring for others may be due to both strategic motivations, based on deliberation and reasoning, and more impulsive (affective) non-strategic motivations, in line with the two major mental systems distinguished by Kahneman (2011). This study estimates and applies a dynamic affective-ties model, allowing for strategic behavior, on a novel experimental data set to investigate four underexplored issues regarding public good environments. First, do negative (antagonistic) relationships as well as positive (cooperative) relationships develop in a public good game environment once equal space is given for their development? Second, do people react differently to the positive versus negative behavior of others in such an environment? Third, does the affective-ties model outperform other relevant models in a proper out-of-sample prediction horse race regarding the same game? Fourth, is this model helpful in explaining behavior across different contexts? Our results provide a clear yes to each of these four questions. Negative relationships do develop, but seem less stable than positive relationships in the long run; people appear to react more strongly to the positive compared to the negative behavior of others; our estimated (two parameter) model outperforms other models; and our model helps explain why and how people switch behavioral rules (like tit-for-tat) as the parameters of a repeated prisoner’s dilemma game change.
    Date: 2022–12–05
  4. By: Burchi, Francesco; Zapata-Román, Gabriela
    Abstract: Inequality is bad per se and has adverse effects, among other things, on economic development and the environment. It is also often argued that high and increasing inequalities put societies under stress, which increases the likelihood of social conflicts. However, the literature on this topic is scarce and some of the conclusions are not adequately supported by empirical evidence. This is mainly because there are different definitions and measurements of social cohesion. Moreover, some definitions of social cohesion incorporate inequality, thus making it impossible to examine how these two phenomena interact with one another. This paper analyses both theoretically and empirically, the relationship between inequality and social cohesion. To do so, it employs a recent definition of social cohesion provided by Leininger et al. (2021). According to this definition, social cohesion is composed of three core attributes, namely trust, inclusive identity and cooperation for the common good. These attributes are examined in two dimensions, namely the horizontal (relationship among individuals) and vertical (relationship between individuals and state institutions) dimensions of social cohesion. [...]
    Keywords: Inequality, Social cohesion, Trust, Cooperation, Identity, Measurement, Social indicators, Correlation, Africa
    Date: 2022
  5. By: Liqui Lung, C. W.; ; ;
    Abstract: A recent literature shows how a priori identical individuals belonging to different social groups make different choices. This paper proposes a novel explanation for this identity-driven choice behavior. Agents choose whether to undertake a task with a probability of success driven by an ability. They have a noisy perception of this ability and observe social cues that stem from the prevalence of their subgroup among the successful individuals. Although the noise in their perception is unbiased, it has an asymmetric effect on expected utility. This makes it optimal for certain agents to bias their noisy perception with social cues, even when these cues are irrelevant in a Bayesian sense. I show the existence of a stable population equilibrium in which both task allocation and the use of social cues differ between a priori identical subgroups.
    JEL: D81 D91 I24 Z13
    Date: 2022–12–15
  6. By: Miller, Marcus (University of Warwick, CAGE and CEPR)
    Abstract: Francis Fukuyama’s bold prediction that Western liberal democracy is ‘the final form of human government’ was promptly challenged by Samuel Huntington, who foresaw the future as a continuing clash of civilisations. This latter view has found support in the recent Beijing declaration by China and Russia of a ‘New World Order’ with distinct spheres of influence for different cultures. After discussing the contrast between such historical perspectives (of ‘immaculate convergence’ versus cultural diversity), we outline two accounts of how forms of governance emerge from competitive struggle (either domestically or between nation states). However, to set the scene for applying these perspectives to current events, the paper begins with a summary of three eras of political economy post World War II - including the current ‘age of the strongman’, to use the terminology of Gideon Rachman. Subsequently, these various perspectives are employed to see what light they may throw on the disastrous turn of events following the Beijing declaration, with a focus on Russia, where the history of a powerful central state has played a crucial role. How enduring the Russian example may prove in the Darwinian struggle of cultural competition is, of course, a key issue for our time.
    Keywords: Individualism ; Collectivism ; Culture ; Social Contracts ; Social preferences ; Neofeudalism ; Despotism ; New World Order. JEL Codes: C70 ; C73 ; N00 ; P00 ; P50 ; Z10 ; Z13
    Date: 2022

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