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on Evolutionary Economics |
| By: | Costa-Gomes, M.A.; Huck, S.; Weizsäcker, G. |
| Abstract: | In many economic contexts, an elusive variable of interest is the agent's expectation about relevant events, e.g. about other agents' behavior. Recent experimental studies as well as surveys have asked participants to state their beliefs explicitly, but little is known about the causal relation between beliefs and other behavioral variables. This paper discusses the possibility of creating exogenous instrumental variables for belief statements, by shifting the probabilities of the relevant events. We conduct trust game experiments where the amount sent back by the second player (trustee) is exogenously varied by a random process, in a way that informs only the first player (trustor) about the realized variation. The procedure allows detecting causal links from beliefs to actions under plausible assumptions. The IV estimates indicate a signi ficant causal effect, comparable to the connection between beliefs and actions that is suggested by OLS analyses. |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:ner:ucllon:http://eprints.ucl.ac.uk/19473/&r=evo |
| By: | Shaul Almakias (Finance Ministry, Israel); Avi Weiss (Bar-Ilan University) |
| Abstract: | In this paper we import a mainstream psycholgical theory, known as attachment theory, into economics and show the implications of this theory for economic behavior by individuals in the ultimatum bargaining game. Attachment theory examines the psychological tendency to seek proximity to another person, to feel secure when that person is present, and to feel anxious when that person is absent. An individual's attachment style can be classified along two-dimensional axes, one representing attachment "avoidance" and one representing attachment "anxiety". Avoidant people generally feel discomfort when being close to others, have trouble trusting people and distance themselves from intimate or revealing situations. Anxious people have a fear of abandonment and of not being loved. Utilizing attachment theory, we evaluate the connection between attachment types and economic decision making, and find that in an Ultimatum Game both proposers' and responders' behavior can be explained by their attachment styles, as explained by the theory. We believe this theory has implications for economic behavior in different settings, such as negotiations, in general, and more specifically, may help explain behavior, and perhaps even anomalies, in other experimental settings. |
| Keywords: | Attachment Theory, Experimental Economics, Behavioral Economics, Ultimatum Game, Psychology and Economics |
| JEL: | C91 C78 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:biu:wpaper:2010-01&r=evo |
| By: | Christine Binzel; Dietmar Fehr |
| Abstract: | While social relationships play an important role for individuals to cope with missing market institutions, they also limit individuals' range of trading partners. This paper aims at understanding the determinants of trust at various social distances when information asymmetries are present. Among participants from an informal housing area in Cairo we find that the increase in trust following a reduction in social distance comes from the fact that trustors are much more inclined to follow their beliefs when interacting with their friend. When interacting with an ex-ante unknown agent instead, the decision to trust is mainly driven by social preferences. Nevertheless, trustors underestimate their friend's intrinsic motivation to cooperate, leading to a loss in social welfare. We relate this to the agents' inability to signal their trustworthiness in an environment characterized by strong social norms. |
| Keywords: | trust, hidden action, social distance, solidarity, reciprocity, economic development |
| JEL: | C72 C93 D82 O12 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2010-028&r=evo |
| By: | Patel, Amrish (Department of Economics, School of Business, Economics and Law, Göteborg University); Cartwright, Edward (Department of Economics, Keynes College, University of Kent); Mark, Van Vugt (Department of Work and Organizational Psychology, VU University Amsterdam) |
| Abstract: | Individuals often have legitimate but publicly unobservable reasons for not partaking in cooperative social endeavours. This means others who lack legitimate reasons may then have the opportunity to behave uncooperatively, i.e. free-ride, and be indistinguishable from those with legitimate reasons. Free-riders have a degree of anonymity. In the context of a public good game we consider the e¤ect of free-rider anonymity on the ability of voluntary punishment to sustain cooperative social norms. Despite only inducing a weak form of free-rider anonymity, punishment falls and cannot sustain cooperation.<p> |
| Keywords: | Anonymity; free-riding; public goods experiment; punishment |
| JEL: | C92 D82 H41 |
| Date: | 2010–05–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0451&r=evo |
| By: | Schade, Christian; Schroeder, Andreas; Krause, Kai Oliver |
| Abstract: | We analyze the effects of prior gain and loss experiences on individualsâ behavior in two coordination games: battle of the sexes and simultaneous market entry. We propose subjectively transformed games that integrate elements of prospect theory, aggregation of prior and subsequent payoffs, and social projection. Mathematical predictions of behavior are derived based on equilibrium selection concepts. Malesâ behavior in our experimental studies is largely consistent with our predictions. However, the behavior of many female respondents appears to be rather consistent with interpreting the initial random lottery outcomes used to manipulate prior experiences as a signal for the playersâ abilities to compete. This could be related to femalesâ known uneasiness of competing against counterparts that might be male and thus, a generally higher salience of rivalry in our incentivized experiments. Females also chose to play far more mixed strategies than males indicating some uncertainty about what type of behavior is appropriate. |
| Keywords: | Prospect Game Theory, Prior Outcomes, Coordination, Equilibrium Selection, Economic Experiment, Agribusiness, Agricultural and Food Policy, Financial Economics, Institutional and Behavioral Economics, Research Methods/ Statistical Methods, Risk and Uncertainty, |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:huscpw:59524&r=evo |
| By: | Funk, Matt |
| Abstract: | This dissertation introduces "Truly Non-Cooperative Games" – axioms and complimentary negotiation models developed to analyse the human "Struggle for Life" – and presents "The Principle of Relative Insularity", a unified theory of value which unites economics, astrophysics, and biology. In brief, we discover that, reductio ad absurdum, value is a derivative function of relative insularity. |
| Keywords: | non-cooperative games; theory of value; economic development strategy; systemic risks; global threat mitigation; national security; the problem of induction; relative insularity; international cooperation; human survival |
| JEL: | Y40 Q34 C72 |
| Date: | 2010–04–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:22775&r=evo |