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on Evolutionary Economics |
| By: | Sarin, Rajiv; Vahid, Farshid |
| Abstract: | We use the model developed in Sarin and Vahid (1999, GEB) to explain the experiments reported in Erev and Roth (1998, AER). The model supposes that players maximize subject to their "beliefs" which are non-probabilistic and scalar-valued. They are intended to describe the payoffs the players subjectively assess they will obtain from a strategy. In an earlier paper (Sarin and Vahid (1997) we showed that the model predicted behavior in repeated coordination games remarkably well, and better than equilibrium theory or reinforcement learning models. In this paper we show that the same one-parameter model can also explain behavior in games with a unique mixed strategy Nash equilibrium better than alternative models. Hence, we obtain further support for the simple dynamic model. |
| Keywords: | Labor and Human Capital, Teaching/Communication/Extension/Profession |
| URL: | https://d.repec.org/n?u=RePEc:ags:monebs:267377 |
| By: | Joy Das Bairagya; Jonathan Newton; Sagar Chakraborty |
| Abstract: | We present a collaboration ring model -- a network of players playing the prisoner's dilemma game and collaborating among the nearest neighbours by forming coalitions. The microscopic stochastic updating of the players' strategies are driven by their innate nature of seeking selfish gains and shared intentionality. Cooperation emerges in such a structured population through non-equilibrium phase transitions driven by propensity of the players to collaborate and by the benefit that a cooperator generates. The robust results are qualitatively independent of number of neighbours and collaborators. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.11601 |
| By: | Eliana La Ferrara; David H. Yanagizawa-Drott |
| Abstract: | We survey recent research on changing culture and social norms in developing countries and propose a simple framework to interpret these changes. We conceptualize individual utility from a given action as a function of three components: intrinsic valuations, material payoffs, and social interactions. Using this lens, we review evidence on interventions that target each component and their interactions. First, we discuss efforts to shift intrinsic values through schooling and curricula, information campaigns, mass media, and empowerment programs, with particular attention to gender norms, intimate partner violence, and harmful practices such as female genital cutting. Second, we examine social determinants of behavior, including misperceptions about others’ beliefs, coordination failures, and the role of intermediate “stepping-stone” actions in facilitating or hindering norm transitions. Third, we analyze how changes in material incentives, via labor market opportunities, transfers, and legal reforms, affect behavior and underlying norms. Throughout, we highlight methodological challenges in measuring norms and identifying mechanisms, and we emphasize that policy effects depend critically on existing social structures and belief distributions. We conclude by outlining open questions from a positive and normative perspective. |
| JEL: | J20 O12 Z10 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34784 |
| By: | Feltham, Eric Martin (Columbia University); Christakis, Nicholas |
| Abstract: | Homophily, the tendency for individuals to associate with similar others, has long been treated as a central principle of social organization. Yet people may overestimate its importance in reasoning about their social networks. Here, we investigate individuals’ cognitive expectations of homophily and compare these expectations to actual homophily among 10, 072 adults in 82 isolated Honduras villages. We elicited subjects’ beliefs about whether pairs of people in their village social networks were socially tied. We show that people deploy cognitive heuristics that substantially overestimate homophily, including based on wealth, ethnicity, gender, and religion. We also find that people exploit network structure when predicting ties between others, independent of expectations about homophily. Understanding cognitive homophily has implications for models of network formation, interventions targeting social behavior and information diffusion, and the maintenance of social inequality. |
| Date: | 2026–01–23 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:z4nyq_v2 |
| By: | Palumbo, Riccardo; Bortolotti, Alessandro; Sacco, Pier Luigi |
| Abstract: | Prospect theory's characteristic patterns (loss aversion, reference dependence, and nonlinear probability weighting) have generally been interpreted as cognitive biases, i.e. as evidence of bounded rationality. This paper proposes a conceptual framework for understanding these phenomena through the lens of active inference and the free energy principle. We argue that prospect theory's central features are consistent with computationally efficient solutions to decisionmaking under uncertainty within the thermodynamic constraints of neural computation. Loss aversion implements adaptive precision-weighting of prediction errors, allocating greater computational resources to negative deviations that threaten survival. Reference dependence implements efficient predictive coding, transmitting only surprising deviations from expectations. Probability weighting reflects optimal precision allocation across the probability range when maintaining full Bayesian representations would exceed metabolic budgets. This framework is supported by converging evidence: neuroimaging studies show unified value coding with asymmetric precision for losses; pharmacological manipulations reveal dissociable neurotransmitter systems for value encoding versus loss sensitivity; and metabolic manipulations including hypoxia, glucose depletion, and circadian mismatch modulate prospect theory parameters in predicted directions. Developmental evidence shows that children display probability weighting patterns opposite to adults, with gradual transformation through experience pointing at calibration rather than to genetic determination. We propose that prospect theory patterns reflect how biological systems navigate uncertainty under fundamental energetic constraints, with implications for understanding decision-making architecture and reconceptualizing rationality. |
| Date: | 2026–01–30 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:2d9v5_v1 |