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on Evolutionary Economics |
| By: | Duffy, Sean; Smith, John |
| Abstract: | We find that differences in the ability to devote cognitive resources to a strategic interaction imply differences in strategic behavior. In our experiment, we manipulate the availability of cognitive resources by applying a differential cognitive load. In cognitive load experiments, subjects are directed to perform a task which occupies cognitive resources, in addition to making a choice in another domain. The greater the cognitive resources required for the task implies that fewer such resources will be available for deliberation on the choice. Although much is known about how subjects make decisions under a cognitive load, little is known about how this affects behavior in strategic games. We run an experiment in which subjects play a repeated multi-player prisoner's dilemma game under two cognitive load treatments. In one treatment, subjects are placed under a high cognitive load (given a 7 digit number to recall) and subjects in the other are placed under a low cognitive load (given a 2 digit number). According to two different measures, we find evidence that the low load subjects behave more strategically. First, the behavior of the low load subjects converged to the Subgame Perfect Nash Equilibrium prediction at a faster rate than the high load subjects. Second, we find evidence that low load subjects were better able to condition their behavior on the outcomes of previous periods. |
| Keywords: | bounded rationality; experimental economics; experimental game theory; public goods game; strategic sophistication; rational inattention |
| JEL: | C72 C91 |
| Date: | 2012–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:38825&r=evo |
| By: | M. Bigoni; S. Bortolotti; M. Casari; D. Gambetta |
| Abstract: | Social life offers innumerable instances in which trust relations involve multiple agents. In an experiment, we study a new setting called Collective Trust Game where there are multiple trustees, who may have an incentive to coordinate their actions. Trustworthiness has also a strategic motivation, and the trusters' decision depends upon their beliefs about the predominant convention with regard to trustworthiness. In this respect, the Collective Trust Games offers a richer pattern of behavior than dyadic games. We report that the levels of trustworthiness are almost thirty percentage points higher when strategic motivations are present rather than not. Higher levels of trustworthiness also led to higher levels of trust. Moreover, strategic motives appear as a major drive for trustees, comparable in size to positive reciprocity, and more important than concerns for equality. |
| JEL: | C92 C72 D03 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp827&r=evo |
| By: | Luca Corazzini, Christopher Cotton, Paola Valbonesi |
| Abstract: | We present results from a multiple public goods experiment, where each public good produces benefits only if total contributions to it reach a minimum threshold. The experiment allows us to compare subjects' behavior in a benchmark treatment with a single public good and in treatments with more public goods than can be funded. We show how the availability of additional, more-efficient public goods may not make subjects better off. This is because additional options decrease the probability of coordination and discourage contributions. Introducing additional, less-efficient options does not alter coordination and contributions relative to the benchmark. |
| Keywords: | threshold public goods, multiple public goods, salience, efficiency, laboratory experiment |
| JEL: | C91 C92 H40 H41 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:slp:islawp:islawp44&r=evo |
| By: | Björn Bartling; Leif Brandes; Daniel Schunk |
| Abstract: | We show that professional soccer players exhibit reference-dependent behavior during matches. Controlling for the state of the match and for unobserved heterogeneity, we show on a minute-by-minute basis that a player breaches the rules of the game, measured by the referee’s assignment of cards, with a significantly higher probability if his team is behind the expected match outcome, measured by pre-play betting odds of large professional bookmakers. We derive these results in two independent data sets, one from ten seasons of the German Bundesliga, the other from eight seasons the English Premier League, each with more than half a million minutes of play. |
| Keywords: | Reference points, expectations, experience, high stakes, competition |
| JEL: | D03 D81 D84 L83 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:073&r=evo |
| By: | Jaime Gomez-Ramirez; Manuel G. Bedia |
| Abstract: | Since the financial crash in 2008, economic science and the economic profession are under siege. Critics point fingers at ivory tower economists, devoted to the construction of unfalsifiable models based on unrealistic assumptions in purely theoretical basis. Economies are complex man-made systems where organisms and markets interact according to motivations and principles not entirely understood yet. Neo-classical economics is agnostic about the neural mechanisms that underlie the valuation of choices and decision making. The increasing dissatisfaction with the postulates of traditional economics i.e. perfectly rational agents, interacting through efficient markets in the search of equilibrium, has created new incentives for different approcahes in economics. Behavioral economics [2],[9] builds on cognitive and emotional models of agents, Neuroeconomics addresses the neurobiological basis of valuation of choices [8],[7] or Evolutionary economics [3], [5], [4],[1],[6] which strives for a new understanding of the economy as a complex evolutionary system, composed of agents that adapt to endogenous patterns out of equilibrium regions. The science of complexity may provide the platform to cross disciplinary boundaries in seemgly disparate fields such as brain science and economics. In this paper we take an integrative stance, fostering new insights into the economic character of neural activity. Key concepts in brain science like Hebbian learning and neural plasticity are revisited and elaborated, inside a new theoretical framework, that is sensitive to the new ideas that econophysics is proposing for financial markets. The objective here is to precisely delineate common topics in both neural and economic science, within a systemic outlook grounded in empirical basis that jolts the unification across the science of complex systems. |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1205.2999&r=evo |
| By: | Giuseppe De Marco (Università di Napoli Parthenope and CSEF); Giovanni Immordino (Università di Salerno and CSEF) |
| Abstract: | This paper studies how incentives are affected by intention-based reciprocity preferences when the principal hires many agents. Our results describe the agents' psychological attitudes required to sustain a given strategy profile. We also show that hiring reciprocal agents to implement a first or a second-best contract will always benefit the principal if the strategy profile is symmetric. When instead the profile (first or second-best) is asymmetric the principal's best interest might be better served by self-interested agents. We conclude the paper by clarifying when symmetric profiles are most likely to arise. |
| Keywords: | reciprocity, many agents, psychological games |
| JEL: | C72 D03 D86 |
| Date: | 2012–05–10 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:314&r=evo |
| By: | Jellal, Mohamed; Bouzahzah, Mohamed |
| Abstract: | We consider a growth model with education, externalities and a cultural norm . We show that endogenous emergence of this cultural belief may lead to increasing the stock of human capital and accelerating national growth.The mechanism of this internalization is based on the existence of endogenous social status or identity pattern that encourages to the accumulation of knowledge. This cultural norm is presented as an informal mechanism which may be an effective substitute tool to a the formal institution given by a system of income taxation. |
| Keywords: | Culture; Beliefs; Education; Growth |
| JEL: | O43 I21 D83 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:38763&r=evo |
| By: | Carol Graham (The Brookings Institution); Soumya Chattopadhyay (The Brookings Institution) |
| Abstract: | A wide body of research explores gender differences in welfare outcomes, and their implications for economic development. We aim to contribute to this work by looking at differences in reported well-being (happiness) across genders around the world. We examine differences across genders within countries, comparing age, income, education, and urban versus rural cohorts, and explore how those same within country differences vary in countries of different development levels. Our findings, based also on previous research on well-being more generally, highlight some consistent patterns across genders, with women typically happier than men in the world as a whole, with the exception of the poorest sample of countries. We also find substantial differences in the standard relationships between key variables - such as marriage - and happiness when we take differences in gender rights into account. Our research also suggests that cross-gender differences in well-being are affected by the same empirical and methodological factors that drive the paradoxes underlying the income and happiness debates more generally, with norms and expectations playing an important mediating role. Women's happiness seems to fall - at least in the short-term - when there are changes/improvements in gender rights, in keeping with our more general findings on the drops in reported well-being that are often associated with the process of acquiring agency. |
| Keywords: | happiness, gender, agency, expectations |
| JEL: | I3 J1 J7 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2012-010&r=evo |
| By: | Morone, Andrea; Ozdemir, Ozlem |
| Abstract: | This experimental study investigates insurance decisions in low-probability, high-loss risk situations. Results indicate that subjects consider the probability of loss (loss size) when they make buying decisions (paying decisions). Most individuals are risk averse with no specific threshold probability. |
| Keywords: | Black swan; Risk; Insurance; Low probability; High loss; Experiment |
| JEL: | D81 C91 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:38842&r=evo |
| By: | Andreu, Rafael (IESE Business School); Riverola, Josep (IESE Business School); Rosanas, Josep M. (IESE Business School); de Santiago, Rafael (IESE Business School) |
| Abstract: | Economics-based models typically overlook management decisions and firms' capabilities. We develop a model that puts firms at center stage by simulating the aggregate behavior of a population of firms resulting from specific management decisions. The model features a learning process that produces changes in companies' capabilities. Decisions are made under imperfect information and bounded rationality, and managers may sacrifice short-term performance in exchange for qualitative variables that affect their firm's future potential. The model provides a structured setting in which these issues-often discussed only in an informal way-can be more rigorously analyzed. The simulations produce a variety of hard-to-anticipate emergent behaviors. Economic performance appears to be quite sensitive to managers' estimates of the true capabilities of their own firms. Also, companies that are willing to accept sacrifices in the short run in order to increase future potential appear to be more stable than the rest. |
| Keywords: | Capability building vs. economic performance; imperfect information; learning: bounded rationality; |
| Date: | 2012–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0952&r=evo |
| By: | Dang, Duc Anh |
| Abstract: | In this paper, I provide a new empirical evidence that natural environment can shape individual risk preferences. By combining historical data on climate variation and contemporary survey questions on risk aversion, I find that risk aversion is significantly different for people who live in areas that have suffered high frequency of natural disasters. In particular, individuals highly affected by climate volatility show a long term risk aversion. The finding also supports the hypothesis that when people used to live in risky environment, an incremental increase in risk affects their risk preferences less. |
| Keywords: | Climate variation, risk aversion, Vietnam |
| JEL: | D03 O53 Q54 |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:38738&r=evo |