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on Evolutionary Economics |
| By: | Marcin Dziubinski; Jaideep Roy |
| Abstract: | The paper studies an evolutionary model where players from a given population are randomly matched in pairs each period to play a co-ordination game. At each instant, a player can choose to adopt one of the two possible behavior rules, called the rational rule and the aspiring rule, and then take actions prescribed by the chosen rule. The choice between the two rules depends upon their relative performance in the immediate past. We show that there are two stable long run outcomes where either the rational rule becomes extinct and all players in the population achieve full eciency, or that both the behavior rules co-exist and there is only a partial use of ecient strategies in the population. These ndings support the use of the aspiration driven behavior in several existing studies and also help us take a comparative evolutionary look at the two rules in retrospect. |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:edb:cedidp:07-14&r=evo |
| By: | Alger, Ingela (Carleton University); Weibull, Jörgen (Dept. of Economics, Stockholm School of Economics) |
| Abstract: | We analyze the effects of family ties on the incentives for productive effort. A family is modelled as a pair of altruistic siblings. Each sibling exerts effort to produce output under uncertainty and siblings may transfer output to each other. We show that altruism has a non-monotonic effect on effort. We study how this effect depends on "climate," the magnitude and volatility of returns to effort. We also analyze the evolutionary robustness of family ties and how this robustness depends on climate. We find that family ties will be stronger in milder climates than in harsher climates. |
| Keywords: | altruism; family ties; moral hazard; evolutionary robustness |
| JEL: | D02 D13 |
| Date: | 2007–11–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hastef:0682&r=evo |
| By: | Alger, Ingela (Carleton University); Weibull, Jörgen (Dept. of Economics, Stockholm School of Economics) |
| Abstract: | We analyze the effects of family ties on the incentives for production of effort, where family ties are defined as a mixture of true and coerced altruism between family members. We model families as pairs of siblings. Each sibling exerts effort in order to obtain output under uncertainty. A social norm dictates that a sibling with a high output must share a specified amount of this output with his sibling, if the latter's output is low. Siblings may be truly altruistic towards each other, but not to a larger degree than dictated by the social norm. We compare such informal family insurance with actuarially fair formal insurance. We show that coerced family altruism reduces individual efforts in equilibrium. However, individuals always benefit ex ante from living in families with coerced altruism, as compared with living in autarky. We show that a certain degree of coerced family altruism is robust as a social norm in a society of selfish individuals. Finally, we show that if family members are sufficiently altruistic to each other, then informal family insurance by way of coerced altruism may outperform actuarially fair insurance programs. |
| Keywords: | altruism; coerced altruism; family ties; insurance; moral hazard |
| JEL: | D02 D13 |
| Date: | 2007–10–24 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hastef:0681&r=evo |
| By: | Eric Maskin (School of Social Science, Institute for Advanced Study) |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:ads:wpaper:0080&r=evo |