nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2023‒12‒04
seven papers chosen by
Matthew Baker, City University of New York

  1. Convergent Evolution Toward the Joint-Stock Company By David Le Bris; William N. Goetzmann; Sébastien Pouget
  2. Some coordination problems are harder than others By Argyrios Deligkas; Eduard Eiben; Gregory Gutin; Philip R. Neary; Anders Yeo
  3. Ambiguity induces opportunistic rule breaking and erodes social norms By Lucas Molleman; Daniele Nosenzo; Tina Venema
  4. ‘IOS11’: A new, extended, interactive version of the ‘Inclusion of Other in the Self’ scale By Malte Baader; Chris Starmer; Fabio Tufano; Simon Gächter
  5. How Cognitive Skills Affect Strategic Behavior: Cognitive Ability, Fluid Intelligence and Judgment By Gill, David; Knepper, Zachary; Prowse, Victoria; Zhou, Junya
  6. Self-Control and Demand for Preventive Health: Evidence from Hypertension in India By Bai, Liang; Handel, Benjamin; Miguel, Edward; Rao, Gautam
  7. Decomposing Trust By Dirk Engelmann; Jana Friedrichsen; Roel van Veldhuizen; Pauline Vorjohann; Joachim Winter

  1. By: David Le Bris; William N. Goetzmann; Sébastien Pouget
    Abstract: The origin of the modern publicly-held joint-stock company is typically traced to large-scale maritime trading companies in England and the Netherlands in the early 17th century. Highlighting medieval cases in southern Europe, we claim that the joint-stock company likely emerged in several times and places, in response to a similar set of needs and requirements for coordinating large-scale enterprises. These prior appearances support the theory of convergent evolution toward the joint-stock company. We document the different legal genealogies of the various paths, their independence and their socio-economic contexts. These observations have implications for identifying the necessary legal and political background underlying the emergence of the joint-stock company, and for the debate regarding the link between institutions and economic development.
    JEL: G30 K22 N20 N43 O43
    Date: 2023–11
  2. By: Argyrios Deligkas; Eduard Eiben; Gregory Gutin; Philip R. Neary; Anders Yeo
    Abstract: In order to coordinate successfully individuals must first identify a target pattern of behaviour. In this paper we investigate the difficulty of identifying prominent outcomes in two kinds of binary action coordination problems in social networks: pure coordination games and anti-coordination games. For both environments, we determine the computational complexity of finding a strategy profile that (i) maximises welfare, (ii) maximises welfare subject to being an equilibrium, and (iii) maximises potential. We show that the complexity of these objectives can vary with the type of coordination problem. Objectives (i) and (iii) are tractable problems in pure coordination games, but for anti-coordination games are NP-hard. Objective (ii), finding the best Nash equilibrium, is NP-hard for both. Our results support the idea that environments in which actions are strategic complements facilitate successful coordination more readily than those in which actions are strategic substitutes.
    Date: 2023–11
  3. By: Lucas Molleman (Department of Psychology, University of Amsterdam, and Social Psychology, Tilburg University); Daniele Nosenzo (Department of Economics and Business Economics, Aarhus University); Tina Venema (Copernicus Institute of Sustainable Development, Utrecht University)
    Abstract: Rules are central to social order, but violations can rapidly spread when compliance is costly to individuals. Moreover, rules are often ambiguous and open to interpretation, creating “wiggle room" to bend rules in self-serving ways. It is currently unknown how ambiguity shapes rule compliance and the sway of social influence. Here we present incentivized experiments (total n=3, 226 American Prolific workers) showing that ambiguity substantially reduces rule compliance. Observing rule bending or a rule violation reduces compliance, but observing compliance does not increase it. The combined effect of ambiguity and bad examples is as strong as the effect of either factor on its own, indicating that many people comply unless an opportunity arises for self-serving rule violation. Further experiments suggest that these results are due to weakened social norms: ambiguity reduces disapproval of rule bending, and people expect violations to increase after observing non-compliance.
    Keywords: Rule-following, peer effects, conditional compliance, behavioral experiment, social influence
    JEL: C91 C92 D91
    Date: 2023–11–14
  4. By: Malte Baader (University of Zurich); Chris Starmer (University of Nottingham); Fabio Tufano (University of Leicester); Simon Gächter (University of Nottingham)
    Abstract: We introduce and test a new tool designed to measure “relationship closeness”. Studying relationship closeness has a long history in psychology and is currently expanding in other fields including economics. Our new measurement tool is a refinement of the widely used ‘Inclusion of Other in the Self’ scale (IOS for short) of Aron et al.(1992) and is designed to embody three key features. First, it retains attractive attributes of the standard IOS tool including being an effective measurement technique which is easy to implement and understand. Second, we enhance the scope for convenient use of the tool via the development of a portable interactive interface that will be particularly useful in online studies. Thirdly and crucially, through extensive pre-registered experimental testing, we demonstrate that our enhanced tool – IOS11 which features an 11-point response scale – outperforms previous versions of IOS in better proxying features of relationships captured by a range of more complex survey tools; the performance of IOS11 is also indistinguishable from that of the more complex ‘Oneness’ measure of Cialdini et al. (1997) which uses the standard IOS as one of its twoitem inputs.
    Keywords: Inclusion of other in the self scale; oneness; relationship closeness; psychometric evaluation; replication
    Date: 2023–10
  5. By: Gill, David (Department of Economics, Purdue University); Knepper, Zachary (Department of Economics, Purdue University); Prowse, Victoria (Department of Economics, Purdue University); Zhou, Junya (Department of Economics, Purdue University)
    Abstract: We explore the influence of cognitive ability and judgment on strategic behavior in the beauty contest game. Using the level-k model of bounded rationality, cognitive ability and judgment both predict higher level strategic thinking. However, individuals with better judgment choose the Nash equilibrium action less frequently, and we uncover a novel dynamic mechanism that sheds light on this pattern. Taken together, our results indicate that fluid (i.e., analytical) intelligence is a primary driver of strategic level-k thinking, while facets of judgment that are distinct from fluid intelligence drive the lower inclination of high judgment individuals to choose the equilibrium action.
    Keywords: cognitive ability; judgment; fluid intelligence; matrix reasoning; beauty contest; strategic sophistication; level-k; experiment; game theory JEL Classification: C92; C72; D91
    Date: 2023
  6. By: Bai, Liang; Handel, Benjamin; Miguel, Edward; Rao, Gautam
    Abstract: Self-control problems constitute a potential explanation for the underinvestment in preventive health in low-income countries. Behavioral economics offers a tool to solve such problems: commitment devices. We conduct a field experiment to evaluate the effectiveness of different types of theoretically motivated commitment contracts in increasing preventive doctor visits by hypertensive patients in rural India. Despite achieving high take-up of such contracts in some treatment arms, we find no effects on actual doctor visits or individual health outcomes. A substantial number of individuals pay for commitment but fail to follow through on the doctor visit, losing money without experiencing health benefits. We develop and structurally estimate a prespecified model of consumer behavior under present bias with varying levels of naiveté. The results are consistent with a large share of individuals being partially naive about their own self-control problems: sophisticated enough to demand some commitment but overly optimistic about whether a given level of commitment is sufficiently strong to be effective. The results suggest that commitment devices may in practice be welfare diminishing, at least in some contexts, and serve as a cautionary tale about their role in health care.
    Keywords: Economics, Applied Economics, Prevention, Clinical Research, Good Health and Well Being, Econometrics, Banking, finance and investment, Applied economics
    Date: 2021–12–02
  7. By: Dirk Engelmann (HU Berlin); Jana Friedrichsen (Christian-Albrechts-Universität Kiel); Roel van Veldhuizen (Lund University); Pauline Vorjohann (University of Exeter); Joachim Winter (LMU Munich)
    Abstract: Trust is an important condition for economic growth and other economic outcomes. Previous studies suggest that the decision to trust is driven by a combination of risk attitudes, distributional preferences, betrayal aversion, and beliefs about the probability of being reciprocated. We compare the results of a binary trust game to the results of a series of control treatments that by design remove the effect of one or more of these components of trust. This allows us to decompose variation in trust behavior into its underlying factors. Our results imply that beliefs are a key driver of trust, and that the additional components only play a role when beliefs about reciprocity are sufficiently optimistic. Our decomposition approach can be applied to other settings where multiple factors that are not mutually independent affect behavior. We discuss its advantages over the more traditional approach of controlling for measures of relevant factors derived from separate tasks in regressions, in particular with respect to measurement error and omitted variable bias.
    Keywords: trust; omitted-variable bias; measurement error;
    JEL: C90 D90
    Date: 2023–11–16

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