Search

Abstract. In this paper, we study a co-evolutionary model of economic change at two hierarchical levels. At the lower level, "institutions" are given and the focus is on how resources are allocated and innovation produced in response to the pay-off structure induced by prevailing institutions. At the higher level, it is the institutions themselves that change as the outcome of a process of social bargaining. The main objective of the paper is to study the interaction between these twolevels of change, attempting to provide some insight on issues like technological/institutional divergence, technological dead-end, institutional inertia, etc.Key words: Technological change - Institutions - Evolution - GamesJEL-classification: C71 - 017 - 031"It appears that evolutionary economics must be the theory of a process of cultural growth as determined by the economic interest, a theory of a cumulative sequence of economic institutions stated in the terms of the process itself." Thorstein Veblen (1898, p. 393). [ABSTRACT FROM AUTHOR]

Consider a situation in which individuals 'post' their private contributions for the financing of an indivisible public project. If their valuations for the project are private information, an efficient outcome cannot be guaranteed by just one shot of this procedure (indeed, this is also the case for any one-shot procedure that is individually rational). We focus, therefore, on the dynamic mechanism in which the described procedure is repeated indefinitely, only stopping when the project can be ensured to be inefficient. Under alternative assumptions on the type space, a unique symmetric Perfect Bayesian equilibrium is shown to exist if contributions are restricted to just two possible levels (say, some pre-specified positive contribution or nothing at all). We also show that, except for a limit case, the right decision is eventually reached along this equilibrium, although generally after some (costly but bounded) delay. [ABSTRACT FROM AUTHOR]

Presents a model of boundedly rational decision making in the Finitely Repeated Prisoner's Dilemma. Parameters of the model; Instances of cooperative behavior; Conditions under which such behavior is an individually optimal response; Positive subjective probability as permeating players' analysis of the game.

Abstract. In this paper, we analyze a generalization of the evolutionary model of Kandori, Mailath, & Rob (1993) where the population is partitioned into groups and evolution takes place "in parallel" at the following two levels: (I) within groups, at the lower level; among groups, at the higher one. Unlike in their context, efficiency considerations always overcome those of risk-dominance in the process of selecting the long-run equilibrium. This provides an explicitly dynamic basis for a conclusion reminiscent of those put forward in the biological literature by the so-called theories group selection. From a normative viewpoint, it suggests the potential importance of "decentralization", here understood as local and independent interaction. [ABSTRACT FROM AUTHOR]

We study a simple model of a population of agents whose interaction network co-evolves with knowledge diffusion and accumulation. Diffusion takes place along the current network and, reciprocally, network formation depends on the knowledge profile. Diffusion makes neighboring agents tend to display similar knowledge levels. On the other hand, similarity in knowledge favors network formation. The cumulative nonlinear effects induced by this interplay produce sharp transitions, equilibrium co-existence, and hysteresis, which sheds some light on why multiplicity of outcomes and segmentation in performance may persist resiliently over time in knowledge-based processes. [ABSTRACT FROM AUTHOR]

Abstract: Some phenomena are characterized by a non-trivial network dynamics exhibiting self-organized criticality or discontinuous transitions, coexistence and hysteresis. After a short review, we show that a similar approach suggests that social communities stabilized by network interactions may become unstable if they grow too large. [Copyright &y& Elsevier]

We compare two zero-sum versions of the so called Chinos Game , a traditional parlour game played in many countries. In one version, which we call Preemption Scenario , the first player who guesses right wins the prize. In the alternative version, called the Copycat Scenario , the last player who guesses right wins the prize. While in the Preemption Scenario there is a unique and fully revealing equilibrium, in the Copycat Scenario all equilibria have first movers pool (i.e. hide) their private information. Our experimental evidence shows, however, that in the latter case early movers do not pool but try to fool, i.e. to "lie" by systematically distorting behavior relative to equilibrium play. In fact, doing so they benefit, although the resulting gains diminish as the game proceeds. This highlights the point that, as players adjust their behavior off equilibrium, they also attempt to exploit the induced strategic uncertainty whenever the game allows for this possibility. [ABSTRACT FROM AUTHOR]

Contagion models have been used to study the spread of social behavior among agents of a networked population. Examples include information diffusion, social influence, and participation in collective action (e.g., protests). Key players, which are typically agents characterized by structural properties of the underlying network (e.g., high degree, high core number or high centrality) are considered important for spreading social contagions. In this paper, we ask whether contagions can propagate through a population that is devoid of key players. We justify the use of Erdős-Rényi random graphs as a representation of unstructured populations that lack key players, and investigate whether complex contagions—those requiring reinforcement—can spread on them. We demonstrate that two game-theoretic contagion models that utilize common knowledge for collective action can readily spread such contagions, thus differing significantly from classic complex contagion models. We compare contagion dynamics results on unstructured networks to those on more typically-studied, structured social networks to understand the role of network structure. We test the classic complex contagion and the two game-theoretic models with a total of 18 networks that range over five orders of magnitude in size and have different structural properties. The two common knowledge models are also contrasted to understand the effects of different modeling assumptions on dynamics. We show that under a wide range of conditions, these two models produce markedly different results. Finally, we demonstrate that the disparity between classic complex contagion and common knowledge models persists as network size increases. [ABSTRACT FROM AUTHOR]

Abstract: The paper reports an experimental study based on a variant of the popular Chinos game, which is used as a simple but paradigmatic instance of observational learning. There are three players, arranged in sequence, each of which wins a fixed price if she manages to guess the total number of coins lying in everybodyʼs hands. Our evidence shows that, despite the remarkable frequency of equilibrium outcomes, deviations from optimal play are also significant. And when such deviations occur, we find that, for any given player position, the probability of a mistake is increasing in the probability of a mistake of her predecessors. This is what we call an error cascade, which we measure by evaluating the (heterogeneous) Quantal Response Equilibrium which better suits our data. We also check the robustness of our findings when we allow for belief heterogeneity by applying cognitive frame of limited depth of reasoning. [Copyright &y& Elsevier]

The current economic crisis illustrates a critical need for new and fundamental understanding of the structure and dynamics of economic networks. Economic systems are increasingly built on interdependencies, implemented through trans-national credit and investment networks, trade relations, or supply chains that have proven difficult to predict and control. We need, therefore, an approach that stresses the systemic complexity of economic networks and that can be used to revise and extend established paradigms in economic theory. This will facilitate the design of policies that reduce conflicts between individual interests and global efficiency, as well as reduce the risk of global failure by making economic networks more robust. [ABSTRACT FROM AUTHOR]

We study a setting in which individual players choose their partners as well as a mode of behavior in 2×2 anti-coordination games - games where a player’s best response is to choose an action unlike that of her partner. We characterize the equilibrium networks as well as study the effects of network structure on individual behavior. Our analysis shows that both network architecture and induced behavior crucially depend on the value of the cost of forming links. In general, equilibrium configurations are found to be neither unique nor efficient. [ABSTRACT FROM AUTHOR]

In a well networked community, there is intense social interaction, and information disseminates briskly and broadly. This is important if the environment is volatile (i.e., keeps changing) and individuals never stop searching for fresh opportunities. Here, we present a simple model that attributes the rise of a dynamic society to the emergence of some key features in its social network. We also explain the apparently paradoxical observation that although such features do not necessarily materialize even under favorable conditions they display a significant resilience to deteriorating conditions. We interpret these findings as a discontinuous phase transition in the network formation process.