|
on Evolutionary Economics |
| By: | Isaak Mengesha; Meiqi Sun; Debraj Roy |
| Abstract: | Why do maladaptive perceptions and norms, such as zero-sum interpretations of interaction, persist even when they undermine cooperation and investment? We develop a framework where bounded rationality and heterogeneous cognitive biases shape the evolutionary dynamics of norm coordination. Extending evolutionary game theory with quantal response equilibria and prospect-theoretic utility, we show that subjective evaluation of payoffs systematically alters population-level equilibrium selection, generating stable but inefficient attractors. Counterintuitively, our analysis demonstrates that the benefit of rationality and the cost of risk aversion on welfare behave in nonmonotone ways: intermediate precision enhances coordination, while excessive precision or strong loss aversion leads to persistent lock-in at low-payoff and zero-sum equilibria. These dynamics produce an endogenous equity-efficiency trade-off: parameter configurations that raise aggregate welfare also increase inequality, while more equal distributions are associated with lower efficiency. The results highlight how distorted payoff perceptions can anchor societies in divergent institutional trajectories, offering a behavioral-evolutionary explanation for persistent zero-sum norms and inequality. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.16453 |
| By: | Li, David; Lukyanov, Georgy |
| Abstract: | This paper studies an infinite-horizon framework in which two large populations of players are randomly matched to play a Prisoner’s Dilemma. Each player lives for two consecutive periods: as a young player from one group, and then as an old player in the other group. Each population has a known fraction of honest types—individuals who always cooperate unless paired with a player who has been observed to defect against a cooperating partner in the past. Because such defections (i.e., breakdowns of trust) are publicly observed, any defector risks carrying a stigma into future interactions. We show that when the benefits from defection are sufficiently large, there exists an equilibrium in which an increase in the fraction of honest types can reduce the likelihood of cooperation. Moreover, we demonstrate that introducing imperfect public memory—allowing past misdeeds to be probabilistically “cleared”—does not enhance cooperation. |
| Keywords: | Overlapping generations; Prisoner’s Dilemma; Reputation; Stigma. |
| JEL: | C72 C73 D82 D83 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131096 |
| By: | Xiaomeng Ding; Simon Weidenholzer; Boyu Zhang |
| Abstract: | We study evolutionary dynamics in which firms endogenously revise the behavioral rules that govern strategy revisions in symmetric Cournot oligopoly. Specifically, we consider two principles that guide rule revision, No-Birth and Survival-of-the-Fittest, both grounded in imitation-based heuristics. We show that, under these principles, all firms eventually adopt the same behavioral rule. Focusing on two classical rules, myopic best response and imitation, we demonstrate that rule revision plays a crucial role in determining long-run equilibria in Cournot oligopoly. The set of long-run equilibria includes the state where all players use best response learning and choose the Nash equilibrium quantities and states where all firms use imitation learning and choose specific symmetric quantities which include (but are not necessarily restricted to) Walrasian quantities. Our results extend to more general aggregative games. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.09839 |
| By: | Pascal Nieder; Sven Arne Simon |
| Abstract: | Compliance with complex regulatory requirements can be challenging. We study why and how complexity affects non-compliance in terms of incorrect reporting. Our novelexperimental design isolates two distinct complexity effects: an increase in honest mistakes and a substantial shift toward self-serving dishonesty. We identify two mechanisms for this dishonesty shift. First, individuals with social image concerns systematically take advantage of plausible deniability. Second, we document an unexplored form of dishonesty: besides conscious lies, individuals use fraudulent shortcuts in response to complex cheating opportunities. |
| Keywords: | Dishonest behavior, Complexity, Lying, Non-Compliance, Experiment |
| JEL: | C91 D83 D91 H26 K42 |
| URL: | https://d.repec.org/n?u=RePEc:mpi:wpaper:tax-mpg-rps-2024-17 |