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Evolutionary Thinking in Microeconomic Models: Prestige Bias and Market Bubbles

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  • Adrian Viliami Bell

Abstract

Evolutionary models broadly support a number of social learning strategies likely important in economic behavior. Using a simple model of price dynamics, I show how prestige bias, or copying of famed (and likely successful) individuals, influences price equilibria and investor disposition in a way that exacerbates or creates market bubbles. I discuss how integrating the social learning and demographic forces important in cultural evolution with economic models provides a fruitful line of inquiry into real-world behavior.

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  • Adrian Viliami Bell, 2013. "Evolutionary Thinking in Microeconomic Models: Prestige Bias and Market Bubbles," PLOS ONE, Public Library of Science, vol. 8(3), pages 1-5, March.
    • Handle: RePEc:plo:pone00:0059805
    DOI: 10.1371/journal.pone.0059805
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    8. Olivier J. Blanchard & Mark W. Watson, 1982. "Bubbles, Rational Expectations and Financial Markets," NBER Working Papers 0945, National Bureau of Economic Research, Inc.
    9. Guillermo A. Calvo & Enrique G. Mendoza, 2000. "Contagion, Globalization, and the Volatility of Capital Flows," NBER Chapters, in: Capital Flows and the Emerging Economies: Theory, Evidence, and Controversies, pages 15-41, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Ozgur Aydogmus & Hasan Cagatay & Erkan Gürpinar, 2020. "Does social learning promote cooperation in social dilemmas?," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 15(3), pages 633-648, July.

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