nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2023‒02‒13
four papers chosen by
Matthew Baker
City University of New York

  1. Evolutionary finance: A model with endogenous asset payoffs By Igor V. Evstigneev; Thorsten Hens; Mohammad Javad Vanaei
  2. Modeling adaptive forward-looking behavior in epidemics on networks By Lorenzo Amir Nemati Fard; Michele Starnini; Michele Tizzoni
  3. Identity conflict, ethnocentrism and social cohesion By Matteo Sestito
  4. Dishonesty in Developing Countries -What Can We Learn From Experiments? By Shuguang Jiang; Marie Claire Villeval

  1. By: Igor V. Evstigneev (University of Manchester - Economics, School of Social Sciences); Thorsten Hens (University of Zurich - Department of Banking and Finance; Norwegian School of Economics and Business Administration (NHH); Swiss Finance Institute); Mohammad Javad Vanaei (University of Manchester)
    Abstract: Evolutionary Finance (EF) explores financial markets as evolving biological systems. Investors pursuing diverse investment strategies compete for the market capital. Some "survive" and some "become extinct". A central goal is to identify evolutionary stable (in one sense or another) investment strategies. The problem is analyzed in a framework combining stochastic dynamics and evolutionary game theory. Most of the models currently considered in EF assume that asset payoffs are exogenous and depend only on the underlying stochastic process of states of the world. The present work develops a model where the payoffs are endogenous: they depend on the share of total market wealth invested in the asset.
    Date: 2022–12
  2. By: Lorenzo Amir Nemati Fard; Michele Starnini; Michele Tizzoni
    Abstract: The course of an epidemic can be drastically altered by changes in human behavior. Incorporating the dynamics of individual decision-making during an outbreak represents a key challenge of epidemiology, faced by several modeling approaches siloed by different disciplines. Here, we propose an epi-economic model including adaptive, forward-looking behavioral response on a heterogeneous networked substrate, where individuals tune their social activity based on future health expectations. Under basic assumptions, we show that it is possible to derive an analytical expression of the optimal value of the social activity that matches the traditional assumptions of classic epidemic models. Through numerical simulations, we contrast the settings of global awareness -- individuals only know the prevalence of the disease in the population -- with local awareness, where individuals explicitly know which of their contacts are infected. We show that behavior change can flatten the epidemic curve by lowering the peak prevalence, but local awareness is much more effective in curbing the disease early with respect to global awareness. Our work bridges classical epidemic modeling with the epi-economic approach, and sheds light on the effects of heterogeneous behavioral responses in curbing the epidemic spread.
    Date: 2023–01
  3. By: Matteo Sestito (Aix-Marseille Univ, CNRS, AMSE, Marseille, France.)
    Abstract: This paper uses a novel dataset on ethnic warfare to shed light on how conflict affects social identification and cohesion. A large body of anecdotal studies suggests that ethnic identities become more salient at times of conflict. Using data from eighteen sub-Saharan countries, I provide econometric evidence for such a claim. The effect of ethnic conflict on various measures of social cohesion is also investigated, uncovering a positive relationship between the two. The finding is understood as a result of the ethnocentric dynamics generated by conflict: as ethnic warfare increases ethnic identification, in-group cooperation follows suit. This parochial interpretation is further strengthened by the use of remote violence and the conditionality of conflict-induced pro-social behaviour on low levels of ethnic polarisation.
    Keywords: ethnic conflict, social cohesion, identity, Africa
    JEL: D74 N47 O55 Z13
    Date: 2023–01
  4. By: Shuguang Jiang; Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper reviews the recent literature on cheating and corruption to demonstrate the value that experimental methods hold for studying dishonesty in developing countries. Emphasizing the diversity of experimental methods, the chapter highlights the contributions of laboratory and field experiments to the measurement of crosscountry differences and to the identification of select causes of corruption and cheating. This body of literature has provided evidence of the causal effects of social norms, institutions, group identity, and social status concerns. Moreover, the existing research has also delivered practical policy recommendations to ethics-related development problems.
    Keywords: Dishonesty, Corruption, Developing countries, Experiments
    Date: 2022–12–15

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