nep-evo 2006-07-28 papers

on Evolutionary Economics

Issue of 2006‒07‒28
two papers chosen by
Matthew Baker
US Naval Academy, USA

Altruism and Climate By Ingela Alger; JÃ¶rgen W. Weibull
Two-stage Boundedly Rational Choice Procedures: Theory and Experimental Evidence By Paola Manzini; Marco Mariotti

By:	Ingela Alger (Boston College); JÃ¶rgen W. Weibull (Stockholm School of Economics)
Abstract:	Recognizing that individualism, or weak family ties, may be favorable to economic development, we ask how family ties interact with climate to determine individual behavior and whether there is reason to believe that the strength of family ties evolves differently in different climates. For this purpose, we develop a simple model of the interaction between two individuals who are more or less altruistic towards each other. Each individual exerts effort to produce a consumption good under uncertainty. Outputs are observed and each individual chooses how much, if any, of his or her output to share with the other. We analyze how the equilibrium outcome depends on altruism and climate for ex ante identical individuals. We also consider (a) "coerced altruism," that is, situations where a social norm dictates how output be shared, (b) the effects of insurance markets ,and (c) the role of institutional quality. The evolutionary robustness of altruism is analyzed and we study how this depends on climate.
Keywords:	altruism, family ties, individualism, moral hazard, evolution.
JEL:	D02 D13
Date:	2006–07–10
URL:	http://d.repec.org/n?u=RePEc:boc:bocoec:643&r=evo

Two-stage Boundedly Rational Choice Procedures: Theory and Experimental Evidence

By:	Paola Manzini (Queen Mary, University of London and IZA); Marco Mariotti (Queen Mary, University of London)
Abstract:	We study and test a class of boundedly rational models of decision making which rely on sequential eliminative heuristics. We formalize two sequential decision procedures, both inspired by plausible models popular among several psychologists and marketing scientists. However we follow a standard `revealed preference' economic approach by fully characterizing these procedures by few, simple and testable conditions on observed choice. Then we test the models (as well as the standard utility maximization model) with experimental data. We find that the large majority of individuals behave in a way consistent with one of our procedures, and inconsistent with the utility maximization model.
Keywords:	Bounded rationality, Choice experiments
JEL:	C91 D9
Date:	2006–07
URL:	http://d.repec.org/n?u=RePEc:qmw:qmwecw:wp561&r=evo

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