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

Author

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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.

Suggested Citation

  • Stark, Oded & Behrens, Doris A., 2009. "An Evolutionary Edge of Knowing Less (or: On the "Curse" of Global Information)," Discussion Papers 49924, University of Bonn, Center for Development Research (ZEF).
  • Handle: RePEc:ags:ubzefd:49924
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    File URL: http://purl.umn.edu/49924
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    References listed on IDEAS

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    1. Stark, Oded, 1998. "On the economics of vanishing," Economics Letters, Elsevier, vol. 61(2), pages 261-266, November.
    2. 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.
    3. Fudenberg, Drew & Levine, David, 1998. "Learning in games," European Economic Review, Elsevier, vol. 42(3-5), pages 631-639, May.
    4. Ellison, Glenn, 1993. "Learning, Local Interaction, and Coordination," Econometrica, Econometric Society, vol. 61(5), pages 1047-1071, September.
    5. Bergstrom, Theodore C & Stark, Oded, 1993. "How Altruism Can Prevail in an Evolutionary Environment," American Economic Review, American Economic Association, vol. 83(2), pages 149-155, May.
    6. Matthew Haag & Roger Lagunoff, 2006. "Social Norms, Local Interaction, And Neighborhood Planning ," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(1), pages 265-296, February.
    7. Venkatesh Bala & Sanjeev Goyal, 1998. "Learning from Neighbours," Review of Economic Studies, Oxford University Press, vol. 65(3), pages 595-621.
    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. Blume Lawrence E., 1993. "The Statistical Mechanics of Strategic Interaction," Games and Economic Behavior, Elsevier, vol. 5(3), pages 387-424, July.
    10. Tackseung Jun & Rajiv Sethi, 2007. "Neighborhood structure and the evolution of cooperation," Journal of Evolutionary Economics, Springer, vol. 17(5), pages 623-646, October.
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    Citations

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    Cited by:

    1. Tristan Boyer & Nicolas Jonard, 2014. "Imitation and Efficient Contagion," Working Papers 2014-52, Department of Research, Ipag Business School.
    2. Leitner, Stephan & Rausch, Alexandra & Behrens, Doris A., 2017. "Distributed investment decisions and forecasting errors: An analysis based on a multi-agent simulation model," European Journal of Operational Research, Elsevier, vol. 258(1), pages 279-294.
    3. Boyer, Tristan & Jonard, Nicolas, 2014. "Imitation and efficient contagion," Journal of Economic Behavior & Organization, Elsevier, vol. 100(C), pages 20-32.
    4. Stark, Oded & Jakubek, Marcin, 2011. "Is population growth conducive to the sustainability of cooperation?," Economics & Human Biology, Elsevier, vol. 9(4), pages 443-451.
    5. Ludo Waltman & Nees Eck & Rommert Dekker & Uzay Kaymak, 2013. "An Evolutionary Model of Price Competition Among Spatially Distributed Firms," Computational Economics, Springer;Society for Computational Economics, vol. 42(4), pages 373-391, December.
    6. 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.
    7. repec:ipg:wpaper:2014-052 is not listed on IDEAS
    8. Stephan Leitner & Doris Behrens, 2015. "On the fault (in)tolerance of coordination mechanisms for distributed investment decisions," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 23(1), pages 251-278, March.

    More about this item

    Keywords

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

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • 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, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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