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Economic Darwinism

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  • Birgitte Sloth

    ()

  • Hans Whitta-Jacobsen

    ()

Abstract

We define an evolutionary process of “economic Darwinism” for playing-the-field, symmetric games. The process captures two forces. One is “economic selection”: if current behavior leads to payoff differences, behavior yielding lowest payoff has strictly positive probability of being replaced by an arbitrary behavior. The other is “mutation”: any behavior has at any point in time a strictly positive, very small probability of shifting to an arbitrary behavior. We show that behavior observed frequently is in accordance with “evolutionary equilibrium”, a static equilibrium concept suggested in the literature. Using this result, we demonstrate that generally under positive (negative) externalities, economic Darwinism implies even more under- (over-) activity than does Nash equilibrium.

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Bibliographic Info

Article provided by Springer in its journal Theory and Decision.

Volume (Year): 70 (2011)
Issue (Month): 3 (March)
Pages: 385-398

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Handle: RePEc:kap:theord:v:70:y:2011:i:3:p:385-398

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Web page: http://www.springerlink.com/link.asp?id=100341

Related research

Keywords: Evolutionary game theory; Darwinian evolution; Economic selection; Mutation; Evolutionary equilibrium; Stochastic stability;

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  1. James Bergin & Dan Bernhardt, 2004. "Comparative Learning Dynamics," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(2), pages 431-465, 05.
  2. Schaffer, Mark E., 1989. "Are profit-maximisers the best survivors? : A Darwinian model of economic natural selection," Journal of Economic Behavior & Organization, Elsevier, vol. 12(1), pages 29-45, August.
  3. Burkhard Schipper, 2002. "Submodularity and the Evolution of Walrasian Behavior," Bonn Econ Discussion Papers bgse4_2003, University of Bonn, Germany.
  4. Fernando Vega Redondo, 1996. "The evolution of walrasian behavior," Working Papers. Serie AD 1996-05, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  5. Stegeman, Mark & Rhode, Paul, 2004. "Stochastic Darwinian equilibria in small and large populations," Games and Economic Behavior, Elsevier, vol. 49(1), pages 171-214, October.
  6. James Bergin & Dan Bernhardt, 2006. "Cooperation through Imitation," Working Papers 1042, Queen's University, Department of Economics.
  7. Carlos Alós-Ferrer & Ana Ania, 2005. "The evolutionary stability of perfectly competitive behavior," Economic Theory, Springer, vol. 26(3), pages 497-516, October.
  8. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
  9. Corchon, Luis C., 1994. "Comparative statics for aggregative games the strong concavity case," Mathematical Social Sciences, Elsevier, vol. 28(3), pages 151-165, December.
  10. Alex Possajennikov, 2003. "Evolutionary foundations of aggregate-taking behavior," Economic Theory, Springer, vol. 21(4), pages 921-928, 06.
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