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An Evolutionary Edge of Knowing Less (or: On the "Curse" of Global Information)

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  • Stark, Oded
  • Behrens, Doris A.

Abstract

Consider a population of farmers who live around a lake. Each farmer engages in trade with his two adjacent neighbors. The trade is governed by a prisoner’s dilemma “rule of engagement.” A farmer’s payoff is the sum of the payoffs from the two prisoner’s dilemma games played with his two neighbors. When a farmer dies, his son takes over. The son decides whether to cooperate or defect by considering the actions taken and the payoffs received by the most prosperous members of the group comprising his own father and a set of his father’s neighbors. The size of this set, which can vary, is termed the “span of information.” It is shown that a larger span of information can be detrimental to the stable coexistence of cooperation and defection, and that in well-defined circumstances, a large span of information leads to an end of cooperation, whereas a small span does not. Conditions are outlined under which, when individuals’ optimization is based on the assessment of less information, the social outcome is better than when optimization is based on an assessment of, and a corresponding response to, more information.

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Bibliographic Info

Paper provided by University of Bonn, Center for Development Research (ZEF) in its series Discussion Papers with number 49924.

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Date of creation: Mar 2009
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Handle: RePEc:ags:ubzefd:49924

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Related research

Keywords: Span of interaction; Span of information; Imitation; Social welfare; Community/Rural/Urban Development; D83; R12; O4;

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References

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  1. Bala, Venkatesh & Goyal, Sanjeev, 1998. "Learning from Neighbours," Review of Economic Studies, Wiley Blackwell, vol. 65(3), pages 595-621, July.
  2. Tackseung Jun & Rajiv Sethi, 2007. "Neighborhood structure and the evolution of cooperation," Journal of Evolutionary Economics, Springer, vol. 17(5), pages 623-646, October.
  3. Bergstrom, Theodore C & Stark, Oded, 1993. "How Altruism Can Prevail in an Evolutionary Environment," American Economic Review, American Economic Association, vol. 83(2), pages 149-55, May.
  4. Ellison, Glenn, 1993. "Learning, Local Interaction, and Coordination," Econometrica, Econometric Society, vol. 61(5), pages 1047-71, September.
  5. Matthew Haag & Roger Lagunoff, 2000. "social Norms, Local Interaction and Neighborhood Planning," Levine's Working Paper Archive 2049, David K. Levine.
  6. Oded Stark, 1998. "On the Economics of Vanishing," Departmental Working Papers _099, Chinese University of Hong Kong, Department of Economics.
  7. Blume Lawrence E., 1993. "The Statistical Mechanics of Strategic Interaction," Games and Economic Behavior, Elsevier, vol. 5(3), pages 387-424, July.
  8. Outkin, Alexander V., 2003. "Cooperation and local interactions in the Prisoners' Dilemma Game," Journal of Economic Behavior & Organization, Elsevier, vol. 52(4), pages 481-503, December.
  9. Bisin, Alberto & Horst, Ulrich & Ozgur, Onur, 2006. "Rational expectations equilibria of economies with local interactions," Journal of Economic Theory, Elsevier, vol. 127(1), pages 74-116, March.
  10. Drew Fudenberg & David K. Levine, 1998. "Learning in Games," Levine's Working Paper Archive 2222, David K. Levine.
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Citations

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Cited by:
  1. Stark, Oded & Jakubek, Marcin, 2011. "Is population growth conducive to the sustainability of cooperation?," University of Tuebingen Working Papers in Economics and Finance 15, University of Tuebingen, Faculty of Economics and Social Sciences.
  2. Tristan Boyer & Nicolas Jonard, 2014. "Imitation and Efficient Contagion," Working Papers 2014-052, Department of Research, Ipag Business School.
  3. Ludo Waltman & Nees Eck & Rommert Dekker & Uzay Kaymak, 2013. "An Evolutionary Model of Price Competition Among Spatially Distributed Firms," Computational Economics, Society for Computational Economics, vol. 42(4), pages 373-391, December.
  4. Matthias Greiff, 2013. "Rewards and the private provision of public goods on dynamic networks," Journal of Evolutionary Economics, Springer, vol. 23(5), pages 1001-1021, November.

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