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on Evolutionary Economics |
| By: | Lensberg, Terje (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration); Schenk-Hoppé, Klaus Reiner (Leeds University Business School, University of Leeds) |
| Abstract: | This paper complements theoretical studies on the Kelly rule in evolutionary finance by studying a Darwinian model of selection and reproduction in which the diversity of investment strategies is maintained through genetic programming. We find that investment strategies which optimize long-term performance can emerge in markets populated by unsophisticated investors. Regardless whether the market is complete or incomplete and whether states are i.i.d. or Markov, the Kelly rule is obtained as the asymptotic outcome. With price-dependent rather than just state-dependent investment strategies, the market portfolio plays an important role as a protection against severe losses in volatile markets. |
| Keywords: | Evolutionary finance; portfolio choice; asset pricing; genetic programming |
| JEL: | C63 G11 |
| Date: | 2006–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhhfms:2006_023&r=evo |
| By: | Galor, Oded; Michalopoulos, Stelios |
| Abstract: | This research suggests that the evolution of entrepreneurial spirit played a significant role in the process of economic development and the evolution of inequality within and across societies. The study argues that entrepreneurial spirit evolved non-monotonically in the course of human history. In early stages of development, the rise in income generated an evolutionary advantage to entrepreneurial, growth promoting traits and their increased representation accelerated the pace of technological advancements and the process of economic development. Natural selection therefore had magnified growth promoting activities in relatively wealthier economies as well as within the upper segments of societies, enlarging the income gap within as well as across societies. In mature stages of development, however, non-entrepreneurial individuals gained an evolutionary advantage, diminishing the growth potential of advanced economies and contributing to the convergence of the intermediate level economies to the advanced ones. |
| Keywords: | evolution; growth; natural Selection; risk Aversion; technological progress |
| JEL: | J11 J13 O11 O14 O33 O40 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6022&r=evo |
| By: | Avner Ben-Ner; Louis Putterman |
| Abstract: | In the one-shot trust or investment game without opportunities for reputation formation or contracting, economic theory predicts no trusting because there is no incentive for trustworthiness. Under these conditions, theory predicts (a) no effect of pre-play communication, and (b) universal preference for moderate cost binding contracts over interacting without contracts. We introduce the opportunities to engage in pre-play communication and to enter binding or non-binding contracts, and find (a) communication increases trusting and trustworthiness, (b) contracts are largely unnecessary for trusting and trustworthy behaviors and are eschewed by many players, and (c) more trusting leads to higher earnings, and (d) both trustors and trustees favor “fair and efficient” proposals over the more unequal proposals predicted by theory. |
| Keywords: | trust game, trust, trustworthiness, reciprocity, commitment, communication. Comparative analysis of agency problems, Production of public goods |
| JEL: | C72 C91 D63 |
| URL: | http://d.repec.org/n?u=RePEc:hrr:papers:0206&r=evo |