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on Evolutionary Economics |
| By: | Geoffrey Heal; Howard Kunreuther |
| Abstract: | There are many social situations in which the actions of different agents reinforce each other. These include network effects and the threshold models used by sociologists (Granovetter, Watts) as well as Leibenstein's "bandwagon effects." We model such situations as a game with increasing differences, and show that tipping of equilibria as discussed by Schelling, cascading and Dixit's results on clubs with entrapment are natural consequences of this mutual reinforcement. If there are several equilibria, one of which Pareto dominates, then we show that the inefficient equilibria can be tipped to the efficient one, a result of interest in the context of coordination problems. |
| JEL: | D20 D80 D85 Q59 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13579&r=evo |
| By: | Jaromir Kovarik |
| Abstract: | We analyze first-order beliefs in a variation of the Public Good Game. We show that (1) the role that belief elicitation plays in the experiment affects both the contribution behavior and beliefs, and (2) framing influences stated beliefs, as much as contribution behavior. In the second part of the paper, we study the role of heterogeneity in the formation of initial beliefs, and provide an empirical model of the belief up-dating process. Subjects use the past experience, stressing the role of experience that comes from situations similar to the current ones. |
| Keywords: | Beliefs, Public Good, Framing, Experiment, (Belief) Learning |
| JEL: | C91 D83 D84 H40 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:usi:labsit:016&r=evo |