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on Evolutionary Economics |
| By: | Gilberto Tadeu Lima; Jaylson Jair da Silveira |
| Abstract: | There is mounting evidence of persistent capture or drainage of government budgetary resources through unlawful means by individuals in the rest of the economy. This paper develops a formal analytical framework in which such persistence arises as a stable evolutionary equilibrium configuration. Also in keeping with the empirical evidence, this evolutionary equilibrium is characterized by behavioral heterogeneity across decision makers who periodically choose whether or not to engage in illegal activities of capture of government resources. A key implication is that the macrodynamics of the capital stock in per capita terms and the per capita income are crucially affected by the frequency of capturing behavior in the economy in a complex way. |
| Keywords: | Economic growth; Solow-Swan model; evolutionary games |
| JEL: | C73 E13 |
| Date: | 2024–12–03 |
| URL: | https://d.repec.org/n?u=RePEc:spa:wpaper:2024wpecon29 |
| By: | Alexander Dzionara (Johannes-Gutenberg University, Germany); Niklas M. Witzig (Johannes-Gutenberg University, Germany) |
| Abstract: | In many economic contexts, people need to solve trade-offs between doing an activity (e.g., solving a task) faster and doing it better. While time choices in speed-accuracy trade-offs have been extensively studied in cognitive science for motor-response and perception tasks, little evidence is available for more deliberate economic decision-making, where people’s choices often fail to maximize payoffs. Conversely, the impact of behavioral biases – key explanans of said failure – on time choices has yet to be explored. We present a theoretical model linking time choices in speed-accuracy trade-offs to an agent’s abilities, subjective beliefs and uncertainty attitudes. We test the predictions of the model in an experiment for two distinct (but otherwise identical) environments: prospective time choices before solving a task and simultaneous time choices while solving a task. Correlational analyses indicate that overconfidence (in one’s ability) and uncertainty aversion affect time choices in the prospective but not in the simultaneous environment. Probabilistic structural estimations, aimed at capturing the optimization process on the individual level, support this conclusion. This suggests that long-known behavioral biases influence decisions beyond classical domains like risk and intertemporal choice, but may “play out“ differently in planned versus actual actions. |
| Keywords: | speed-accuracy trade-off, time allocation, beliefs, probability weighting |
| JEL: | C91 D01 D83 D90 D91 |
| Date: | 2024–11–29 |
| URL: | https://d.repec.org/n?u=RePEc:jgu:wpaper:2416 |
| By: | James Alm (Tulane University); Weizheng Lai (University of Maryland, College Park); Xun Li (Wuhan University); Peiwen Yuan (Peking University) |
| Abstract: | âHomophilyâ â the tendency of individuals to associate with others who are similar â is considered as a key determinant of friendships. Most studies focus on the homophily of friendships as measured by demographic characteristics. In this paper, we explore patterns of homophily as measured by risk preferences and social preferences, both of which are elicited from a large-scale laboratory experiment. Our focus is on gender differences in homophily, which are examined by testing for behavioral gaps in friendship formation within a pair of same-gender friends in a series of decision-making tasks. We find significant gender differences in homophily: among males, friendship appears along with similar patterns in social decision-making, while females are more likely to become friends with those who exhibit different patterns of decision-making. Our findings are consistent across various robustness checks. We conclude by proposing potential explanations for these gender differences. |
| Keywords: | Homophily; Friendship Formation; Risk Preferences; Social Preferences; Gender Differences |
| JEL: | D85 D91 J16 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:tul:wpaper:2412 |
| By: | Zerong Chen |
| Abstract: | Evolutionary Finance explores the "survival and extinction" questions of investment strategies (portfolio rules) in the market selection process. It studies the stochastic dynamics of ?nancial markets, where asset prices are determined endogenously by short-run equilibrium between supply and demand, which is formed each period as a result of the interaction of strategies employed by competing market participants. This paper focuses on "short-lived" risky securities that are traded at the beginning of each period and yield payo¤s at the end of it (which live only one period), with the cycle then repeating. We review some key models developed in this area, which address the following problems in order: 1) introducing the central results that we are primarily interested in under substantially more general assumptions; 2) exploring the Nash equilibrium properties of survival strategies and the single survivor problem within the framework of independent and identically distributed states of the world and fixed-mix portfolio rules; 3) extending the discussion on the single survivor problem to a considerably broader scope, emphasizing its Markovian nature; 4) including a risk-free asset into the market; 5) allowing for short-selling in the market. The two main results of these studies are: i) the existence of survival strategies that can be expressed by explicit formulas, i.e., Kelly's rule of "betting one's beliefs"; and, ii) the asymptotic uniqueness (within a speci?c class of strategies called basic) of such survival strategies. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:man:sespap:2402 |
| By: | Barron, Kai; Stüber, Robert; van Veldhuizen, Roel |
| Abstract: | An extensive literature documents that people are willing to sacrifice personal material gain to adhere to a moral motive. However, less is known about the psychological mechanisms that operate when two moral motives come into conflict. We hypothesize that individuals adhere to the moral motive that aligns with their self-interest. We test this hypothesis using experiments that induce a conflict between two of the most-studied moral motives: fairness and truth-telling. Consistent with our hypothesis and across experiments, our results show that individuals do prefer to adhere to the moral motive that is more aligned with their self-interest. |
| Keywords: | Moral dilemmas, Dictator game, Lying game, Motives, Motivated reasoning |
| JEL: | C91 D01 D63 D90 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:wzbeoc:306849 |