In search of an evolutionary edge: trading with a few, more, or many
AbstractConsider a population of farmers who live around a lake. Each farmer engages in trade with his m adjacent neighbors, where m is termed the "span of interaction." Trade is governed by a prisonerâs dilemma "rule of engagement." A farmerâs payoff is the sum of the payoffs from the m prisonerâs dilemma games played with his m/2 neighbors to the left, and with his m/2 neighbors to the right. When a farmer dies, his son takes over. The son who adheres to his fatherâs span of interaction decides whether to cooperate or defect by considering the actions taken and the payoffs received by the most prosperous member of the group comprising his father and his fatherâs m trading partners. Under a conventional structure of payoffs, it is shown that a large span of interaction is detrimental to the long-run coexistence of cooperation and defection, and conditions are provided under which the social outcome associated with the expansion of trade when individuals trade with a few is better than that when they trade with many. Under the stipulated conditions it is shown, by means of a static comparative analysis of the steady state configurations of the farmer population, that an expansion of the market can be beneficial in one context, detrimental in another.
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Bibliographic InfoArticle provided by Springer in its journal Journal of Evolutionary Economics.
Volume (Year): 21 (2011)
Issue (Month): 5 (December)
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Web page: http://link.springer.de/link/service/journals/00191/index.htm
Other versions of this item:
- Stark, Oded & Behrens, Doris A., 2010. "In search of an evolutionary edge: trading with a few, more, or many," Discussion Papers 94280, University of Bonn, Center for Development Research (ZEF).
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
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