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on Neuroeconomics |
| 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: | Takeshi Ojima; Shinsuke Ikeda |
| Abstract: | If dishonest behavior stems from a self-control problem, then offering the option to commit to honestywill reduce dishonesty, provided that it lowers the self-control costs of being honest. To test thistheoretical prediction, we conducted an incentivized online experiment in which participants couldcheat at a game of rock-paper-scissors. Treatment groups were randomly or invariably offered a hardHonesty-Commitment Option (HCO), which could be used to prevent cheating. Our between- andwithin-subject analyses reveal that the HCO provision significantly reduced cheating rates byapproximately 64%. Evidence suggests that the commitment device works by lowering self-controlcosts, which is more pronounced in individuals with low cognitive reflection, rather than by anobserver effect. Further analyses reveal two key dynamics. First, an individual’s frequency of not usingthe HCO reliably predicts their propensity to cheat when the option is unavailable. Second, repeatedlydeciding not to use the commitment device can become habitual, diminishing the HCO provision’seffect in reducing cheating over time. This research highlights the effectiveness of honesty-commitment devices in policy design while also noting that their disuse can become habitual, pointingto a new dynamic in the study of cheating. |
| Date: | 2025–10–31 |
| URL: | https://d.repec.org/n?u=RePEc:toh:tupdaa:76 |