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The commitment effect in belief evolution

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  • Gehrig, Thomas
  • Guth, Werner
  • Levinsky, Rene

Abstract

In this note we establish that rational demand expectations will typically not evolve in an evolutionary model. In an evolutionary model, beliefs act like a commitment device to more aggressive behavior. This commitment effect has the same direction for strategic substitutes and complements and fades away in large markets.
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Suggested Citation

  • Gehrig, Thomas & Guth, Werner & Levinsky, Rene, 2004. "The commitment effect in belief evolution," Economics Letters, Elsevier, vol. 85(2), pages 163-166, November.
  • Handle: RePEc:eee:ecolet:v:85:y:2004:i:2:p:163-166
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    References listed on IDEAS

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    1. Bester, Helmut & Guth, Werner, 1998. "Is altruism evolutionarily stable?," Journal of Economic Behavior & Organization, Elsevier, vol. 34(2), pages 193-209, February.
    2. Heifetz, Aviad & Segev, Ella, 2004. "The evolutionary role of toughness in bargaining," Games and Economic Behavior, Elsevier, vol. 49(1), pages 117-134, October.
    3. Mark Casson (ed.), 1997. "Culture, Social Norms and Economics," Books, Edward Elgar Publishing, volume 0, number 1337.
    4. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
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    Cited by:

    1. Shashank Vaid & Michael Ahearne, 2021. "The instantaneous commitment effect: developing stakeholder orientation among managers," AMS Review, Springer;Academy of Marketing Science, vol. 11(1), pages 162-179, June.
    2. Eric S. Dickson, 2006. "Rational Choice Epistemology and Belief Formation in Mass Politics," Journal of Theoretical Politics, , vol. 18(4), pages 454-497, October.
    3. Thomas Gehrig & Werner Güth & René Levínský, 2013. "On insider trading and belief evolution," Journal of Evolutionary Economics, Springer, vol. 23(4), pages 767-781, September.
    4. Wieland Müller & Hans-Theo Normann, 2005. "Conjectural Variations and Evolutionary Stability: A Rationale for Consistency," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 161(3), pages 491-502, September.
    5. Werner Güth & Loreto Erviti & Anthony Ziegelmeyer, 2011. "Asymmetric information without common priors: an indirect evolutionary analysis of quantity competition," Journal of Evolutionary Economics, Springer, vol. 21(5), pages 843-852, December.
    6. Dimitry Rtischev, 2012. "Strategic commitment to pursue a goal other than profit in a Cournot duopoly," Gakushuin Economic Papers, Gakushuin University, Faculty of Economics, vol. 49(2), pages 133-142.

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