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The Evolutionary Game Of Poverty Traps

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  • ELVIO ACCINELLI
  • EDGAR J. SANCHEZ CARRERA

Abstract

We study an evolutionary game in which the individual behavior of the economic agents can lead the economy either into a low-level or a high-level equilibrium. The model represents two asymmetric populations, “leaders and followers”, where in each round an economic agent of population 1 is paired with a member of population 2. Our evolutionary game is a signaling game in which only the leader has private information. The leader moves first; the follower observes the leader's action, but not the leader's type, before choosing her own action. We found the equilibria both as self-confirming and evolutionarily stable strategies. Furthermore, considering an imitative behavior of the followers, we show that to overcome the poverty trap there exists a threshold value equals to the ratio "education costs-efficiency wages" of the number of high-profile economic agents

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Bibliographic Info

Article provided by University of Manchester in its journal The Manchester School.

Volume (Year): 80 (2012)
Issue (Month): 4 (07)
Pages: 381-400

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Handle: RePEc:bla:manchs:v:80:y:2012:i:4:p:381-400

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  1. Azariadis, Costas & Drazen, Allan, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 105(2), pages 501-26, May.
  2. Durlauf, S.N., 1992. "A Theory of Persistent Income Inequality," Papers, Stanford - Institute for Thoretical Economics 47, Stanford - Institute for Thoretical Economics.
  3. Skiba, A K, 1978. "Optimal Growth with a Convex-Concave Production Function," Econometrica, Econometric Society, Econometric Society, vol. 46(3), pages 527-39, May.
  4. Costas Azariadis, 1996. "The Economics of Poverty Traps Part One: Complete Markets," Working Papers, Centro de Investigacion Economica, ITAM 9606, Centro de Investigacion Economica, ITAM.
  5. Karl H. Schlag, . "Why Imitate, and if so, How? A Bounded Rational Approach to Multi- Armed Bandits," ELSE working papers, ESRC Centre on Economics Learning and Social Evolution 028, ESRC Centre on Economics Learning and Social Evolution.
  6. Thomas J Sargent, 2007. "Evolution and Intelligent Design," Levine's Bibliography 122247000000001821, UCLA Department of Economics.
  7. Azariadis, Costas & Stachurski, John, 2005. "Poverty Traps," Handbook of Economic Growth, Elsevier, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 5 Elsevier.
  8. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, Elsevier, vol. 22(1), pages 3-42, July.
  9. Schlag, Karl H., 1999. "Which one should I imitate?," Journal of Mathematical Economics, Elsevier, vol. 31(4), pages 493-522, May.
  10. Schlag, Karl H., 1994. "Why Imitate, and if so, How? Exploring a Model of Social Evolution," Discussion Paper Serie B, University of Bonn, Germany 296, University of Bonn, Germany.
  11. Durlauf,S.N., 2003. "Neighborhood effects," Working papers, Wisconsin Madison - Social Systems 17, Wisconsin Madison - Social Systems.
  12. Lucas, Robert Jr, 1976. "Econometric policy evaluation: A critique," Carnegie-Rochester Conference Series on Public Policy, Elsevier, Elsevier, vol. 1(1), pages 19-46, January.
  13. Acemoglu, Daron, 1996. "A Microfoundation for Social Increasing Returns in Human Capital Accumulation," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 111(3), pages 779-804, August.
  14. Bellante, Don, 1994. " Sticky Wages, Efficiency Wages, and Market Processes," The Review of Austrian Economics, Springer, Springer, vol. 8(1), pages 21-33.
  15. Alos-Ferrer, Carlos & Weidenholzer, Simon, 2006. "Imitation, local interactions, and efficiency," Economics Letters, Elsevier, Elsevier, vol. 93(2), pages 163-168, November.
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