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The Theory Of The Firm And The Evolutionary Games

Author

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  • Sirghi Nicoleta

    () (Universitatea de Vest din Timisoara, Facultatea de Economie si Administrare a Afacerilor)

Abstract

The neoclassical theory of the firm deals with the pattern of perfect competition, within which the perfect information available to economic agents provides instant allocation of production factors and access to economic goods. The Austrian School (C. Menger, L. von Mises, Hayek, etc.) supported the idea of minimal state intervention on the markets, bringing important conceptual developments on the theory of the firm. Hirschleifer (1982) put forward the model of social and institutional functioning, arguing that the game theory is able to predict the outcome of the collective behavior and the human characteristics necessary for building the respective institutions.The evolutionary theory provides the firm and the entrepreneur the recognition of the functions of innovation, of generating and exploiting information and of organizing and coordinating production. The evolutionary perspective of the firm assumes the existence of a body of knowledge that is acquired through and builds up the organizational memory, subsequently found in routines, all choices being made based on these routines (Nelson and Winter, 2002). The evolution of the firm is considered to be similar to natural selection, but unlike the classic market selection, the evolutionists suggest the existence of a plurality of selection media. The present research is structured as follows: a brief introduction into the theories of the firm, the second part of the paper analyzes the theories of the firm from an institutional, neo-institutional and evolutionary perspective. In the third part of the paper the evolutionary games are described and analyzed from the evolutionary perspective of the firm. The last part of the paper represents a study of the "hawk-dove" game dynamic replicator. The final conclusions of the paper show that the evolutionary theory brings valuable contributions to the foundation of explanations regarding economic phenomena, indicating new directions for advanced economic research.

Suggested Citation

  • Sirghi Nicoleta, 2013. "The Theory Of The Firm And The Evolutionary Games," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 533-542, July.
  • Handle: RePEc:ora:journl:v:1:y:2013:i:1:p:533-542
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    File URL: http://anale.steconomiceuoradea.ro/volume/2013/n1/057.pdf
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    References listed on IDEAS

    as
    1. Daniel Friedman, 1998. "On economic applications of evolutionary game theory," Journal of Evolutionary Economics, Springer, vol. 8(1), pages 15-43.
    2. Sandholm, William H., 2010. "Local stability under evolutionary game dynamics," Theoretical Economics, Econometric Society, vol. 5(1), January.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    theory of the firm; game theory; evolutionary theory; evolutionary games; dynamic replicator;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games

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