Impact of Environmental Dynamics on Economic Evolution: Uncertainty, Risk Aversion, and Policy
AbstractThe general question of how environmental dynamics affect the behavioral interaction in an evolutionary economy is considered. To this end, a basic model of a dynamic multi-sector economy is developed where the evolution of investment strategies depends on the diversity of investment strategies, social connectivity and relative contribution of sector specific investments to production. Four types of environmental dynamics are examined that differ in how gradual and how frequent environmental change occurs. Numerical analysis shows how the socially optimal level of diversity increases with the frequency and rapidity of the changes. When there is uncertainty about which type of environmental dynamics will prevail, the socially optimal level of diversity increases with the degree of risk aversion of the policy maker or the society.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 13834.
Date of creation: 2008
Date of revision:
evolutionary economics; agent-based economics; dynamic environments; public policies; risk aversion; uncertainty;
Find related papers by JEL classification:
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Institutional; Evolutionary
- Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ken Binmore, 1994. "Game Theory and the Social Contract, Volume 1: Playing Fair," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262023636, December.
- Joelle Noailly, Jeroen van den Bergh, Cees Withagen, 2001.
"Evolution of Harvesting Strategies: Replicator and Resource Dynamics,"
Computing in Economics and Finance 2001
263, Society for Computational Economics.
- Joïlle Noailly & Jeroen C.J.M. van den Bergh & Cees A. Withagen, 2003. "Evolution of harvesting strategies: replicator and resource dynamics," Journal of Evolutionary Economics, Springer, vol. 13(2), pages 183-200, 04.
- Joelle Noailly & Jeroen van den Bergh & Cees Withagen, 2001. "Evolution of Harvesting Strategies: Replicator and Resource Dynamics," Tinbergen Institute Discussion Papers 01-056/3, Tinbergen Institute.
- Joëlle Noailly, 2008. "Coevolution of economic and ecological systems," Journal of Evolutionary Economics, Springer, vol. 18(1), pages 1-29, February.
- Henrich, Joseph, 2004. "Cultural group selection, coevolutionary processes and large-scale cooperation," Journal of Economic Behavior & Organization, Elsevier, vol. 53(1), pages 3-35, January.
- Oded Galor & Omer Moav, 2002.
"Natural Selection And The Origin Of Economic Growth,"
The Quarterly Journal of Economics,
MIT Press, vol. 117(4), pages 1133-1191, November.
- Galor, Oded & Moav, Omer, 2001. "Natural Selection and the Origin of Economic Growth," CEPR Discussion Papers 2727, C.E.P.R. Discussion Papers.
- Oded Galor & Omer Moav, 2000. "Natural Selection and the Origin of economic Growth," Working Papers 2000-18, Brown University, Department of Economics.
- Galor, Oded & Moav, Omer, 2000. "Natural Selection and the Origin of Economic Growth," Arbetsrapport 2000:5, Institute for Futures Studies.
- Leigh Tesfatsion, 2002. "Agent-Based Computational Economics," Computational Economics 0203001, EconWPA, revised 15 Aug 2002.
- Alistair Munro, 1997. "Economics and biological evolution," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 9(4), pages 429-449, June.
- Joshua M. Epstein & Robert L. Axtell, 1996. "Growing Artificial Societies: Social Science from the Bottom Up," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262550253, December.
- Theodore C. Bergstrom, 2002. "Evolution of Social Behavior: Individual and Group Selection," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 67-88, Spring.
- Smith, Jeffrey, 2002. "Introduction," Labour Economics, Elsevier, vol. 9(2), pages 137-141, April.
- Mirowski, Philip, 2007. "Markets come to bits: Evolution, computation and markomata in economic science," Journal of Economic Behavior & Organization, Elsevier, vol. 63(2), pages 209-242, June.
- Sethi, Rajiv & Somanathan, E, 1996. "The Evolution of Social Norms in Common Property Resource Use," American Economic Review, American Economic Association, vol. 86(4), pages 766-88, September.
- Elinor Ostrom, 2000. "Collective Action and the Evolution of Social Norms," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 137-158, Summer.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.