nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2023‒07‒17
six papers chosen by
Matthew Baker
City University of New York

  1. Risk aversion promotes cooperation By Jay Armas; Wout Merbis; Janusz Meylahn; Soroush Rafiee Rad; Mauricio J. del Razo
  2. Roots of Inequality By Galor, Oded; Klemp, Marc; Wainstock, Daniel Crisóstomo
  3. Heuristic Centered-Belief Players By Irenaeus Wolff
  4. How beautiful people see the world: Cooperativeness judgments of and by beautiful people By Adam Zylbersztejn; Zakaria Babutsidze; Nobuyuki Hanaki; Astrid Hopfensitz
  5. Economics of Healthcare Provider Altruism By Galizzi, Matteo M; Godager, Geir; Li, Jing; Linnosmaa, Ismo; Tammi, Timo; Wiesen, Daniel
  6. Optimal Paternalism in a Population with Bounded Rationality By Charles F. Manski; Eytan Sheshinski

  1. By: Jay Armas; Wout Merbis; Janusz Meylahn; Soroush Rafiee Rad; Mauricio J. del Razo
    Abstract: Cooperative dynamics are central to our understanding of many phenomena in living and complex systems, including the transition to multicellularity, the emergence of eusociality in insect colonies, and the development of full-fledged human societies. However, we lack a universal mechanism to explain the emergence of cooperation across length scales, across species, and scalable to large populations of individuals. We present a novel framework for modelling cooperation games with an arbitrary number of players by combining reaction networks, methods from quantum mechanics applied to stochastic complex systems, game theory and stochastic simulations of molecular reactions. Using this framework, we propose a novel and robust mechanism based on risk aversion that leads to cooperative behaviour in population games. Rather than individuals seeking to maximise payouts in the long run, individuals seek to obtain a minimum set of resources with a given level of confidence and in a limited time span. We explicitly show that this mechanism leads to the emergence of new Nash equilibria in a wide range of cooperation games. Our results suggest that risk aversion is a viable mechanism to explain the emergence of cooperation in a variety of contexts and with an arbitrary number of individuals greater than three.
    Date: 2023–06
  2. By: Galor, Oded (Brown University); Klemp, Marc (University of Copenhagen); Wainstock, Daniel Crisóstomo (Brown University)
    Abstract: Why does inequality vary across societies? We advance the hypothesis that in a market economy, where earning differentials reflect variations in productive traits among individuals, a significant component of the differences in inequality across societies can be attributed to variation in societal interpersonal diversity, shaped by the prehistorical out-of-Africa migration. Exploring the roots of inequality within the US population, we find supporting evidence for our hypothesis: variation in the inequality across groups of individuals originating from different ancestral backgrounds can be traced to the degree of diversity of their ancestral populations. This effect is sizable: a move from the lowest to the highest level of diversity in the sample is associated with an increase in the Gini index from the median to the 75th percentile of the inequality distribution.
    Keywords: inequality, diversity, culture, out-of-Africa migration
    JEL: D60 O10 Z10
    Date: 2023–06
  3. By: Irenaeus Wolff
    Abstract: Strategic behavior oft‰en diverges from Nash-equilibrium, in particular in unexperienced play. I provide data from a class of simple discoordination games and show that none of the popular models of behavioural game theory predicts the predominant aggregate choice patt‹ern. And yet, Noisy Introspection (Goeree and Holt, 2004) readily accounts for about half of the individual observations. Th‘e reason for the apparent paradox and the mismatch of the aggregate data and the models is a disregarded behavioural type that makes up about 25% of the population. Th‘ese 25% hold beliefs that peak in the centre of the option set and that are roughly symmetric. In addition, the players show a more heuristic process translating their belief into actions, as their choices cannot be explained readily by quantal responding. Th‘e behavioural patt‹ern of a ‘centered belief’ in connection with boundedly-rational decision-making is present also in another prominent game from the literature on behavioural game theory, the 11–20 game. Finally, I show that classifying players as ‘heuristic centered-belief types’ by one game’s beliefs has predictive power for behaviour in the other game.
    Keywords: Nash-equilibrium, quantal-response equilibrium, level-k, cognitive hierarchy, salience theory, noisy introspection, central-tendency bias.
    Date: 2023
  4. By: Adam Zylbersztejn (Univ Lyon 2, Université Lumière Lyon 2, GATE UMR 5824, 69130 Ecully, France; research fellow at Vistula University Warsaw (AFiBV), Warsaw, Poland); Zakaria Babutsidze (SKEMA Business School, Université Côte d’Azur (GREDEG) and OFCE, Sciences Po Paris); Nobuyuki Hanaki (Institute of Social and Economic Research, Osaka University); Astrid Hopfensitz (Emlyon Business School and GATE, Ecully, France)
    Abstract: Perceived beauty is one of the strongest predictors of perceived cooperativeness, causing the “beauty bias”. Through a large three-step incentivized behavioral and rating experiment (N=357), we study (1) the relevance of beauty ratings for predicting cooperativeness in an incentivized game and (2) the beauty bias in incentivized predictions of cooperativeness. We additionally (3) investigate if one’s beauty influences the beauty bias in predictions of cooperativenes of others. Our findings demonstrate the robustness of the beauty bias despite its irrelevance for making accurate predictions. We further observe that individuals are affected by the beauty bias irrespective of their beauty. Overall, the results highlight the importance of strong institutions that protect individuals from falling prey to the beauty bias.
    Keywords: cooperation, beauty, perception, hidden action game, experiment
    JEL: C72 D83
    Date: 2023
  5. By: Galizzi, Matteo M (Department of Psychological and Behavioural Science, and LSE Behavioural Lab, London School of Economics and Political Science, UK); Godager, Geir (Department of Health Management and Health Economics); Li, Jing (School of Pharmacy, University of Washington, USA); Linnosmaa, Ismo (Department of Health and Social Management, University of Eastern Finland and Finnish Institute for Health and Welfare (THL), Finland); Tammi, Timo (Faculty of Social Sciences and Business Studies, University of Eastern Finland, Joensuu, Finland); Wiesen, Daniel (Department of Healthcare Management, and Center for Social and Economic Behavior (C-SEB), University of Cologne, Germany)
    Abstract: We propose a comprehensive overview of the main theoretical notions and empirical findings on altruism among physicians and other healthcare providers. While altruism in the behavioral and experimental economics literature is typically defined as a deviation from purely self-interested behavior, the theoretical health economics literature embeds the notion of physician altruism within the doctor–patient relationship. The altruism of physicians is typically defined as the weight in the doctor’s utility function attached to patient’s health benefits, besides the self-interested monetary considerations. We broadly group the empirical evidence into three main categories of evidence: evidence from (i) survey and interview data, (ii) prescriptions records, and (iii) behavioral experiments. Across each of those groups of studies and different methods, the evidence generally supports the theoretical notion that physicians behave ‘altruistically’ in their healthcare decisions. Some studies indicate, however, considerable heterogeneity in physicians’ altruistic preferences.
    Keywords: Altruism; healthcare providers; experimental evidence; structural estimation
    JEL: C91 D03 I10
    Date: 2023–06–23
  6. By: Charles F. Manski; Eytan Sheshinski
    Abstract: A central mission of public economics has been to determine policies that optimize utilitarian welfare. To improve the realism of policy evaluation, it is desirable to enrich understanding of behavior and develop methods of analysis that use the enriched understanding to assess policies. Attention has been given to recognition that behavior may be boundedly rational, but little has been done to draw the implications of this work for mechanism design. Behavioral economists have suggested that planners should limit the choices available to individuals or should frame the options in a manner thought to influence choice, but the discussion has commonly been verbal and casual. We formally consider a planner who has the power to design a discrete choice set from which individuals will choose. We suppose that individuals may be boundedly rational and, hence, may not maximize utility. Our concern is realistic settings in which persons have heterogeneous preferences and may vary in how their choices deviate from utility maximization. We find that optimal paternalism is subtle. The policy that most effectively constrains or influences individual choices depends on the distribution of preferences and the choice probabilities measuring the extent to which persons behave suboptimally, conditional on their preferences.
    JEL: H10
    Date: 2023–06

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