The Evolutionary Game of Poverty Traps
AbstractWe study an evolutionary game in which the individual behavior of the economic agents can lead the economy either into a low-level or a high-level equilibrium. The model represents two asymmetric populations, “leaders and followers”, where in each round an economic agent of population 1 is paired with a member of population 2. Our evolutionary game is a signaling game in which only the leader has private information. The leader moves first; the follower observes the leader's action, but not the leader's type, before choosing her own action. We found the equilibria both as self-confirming and evolutionarily stable strategies. Furthermore, considering an imitative behavior of the followers, we show that to overcome the poverty trap there exists a threshold value equals to the ratio "education costs-efficiency wages" of the number of high-profile economic agents
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Bibliographic InfoPaper provided by Department of Economics, University of Siena in its series Department of Economics University of Siena with number 555.
Date of creation: Feb 2009
Date of revision:
Evolutionary games; imitation rule; poverty traps; replicator dynamics; signaling games; strategic complementarities;
Other versions of this item:
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- I30 - Health, Education, and Welfare - - Welfare and Poverty - - - General
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-04-13 (All new papers)
- NEP-CTA-2009-04-13 (Contract Theory & Applications)
- NEP-EVO-2009-04-13 (Evolutionary Economics)
- NEP-GTH-2009-04-13 (Game Theory)
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