We examine an evolutionary model of preferences in a society where resources are finite. Agents who develop better strategies for bargaining and trading will grow to dominate the population. We show that successful agents will have preferences that exhibit the "endowment effect". The social institution of private property emerges spontaneously. Agents decisions will be subject to "framing" effect, and we are able to make some predictions as to the frames that will be salient in given situations. The model makes a clear distinction between individual welfare and revealed preferences. Nonetheless, it may still be possible to recover information about individual welfare from behavioral data.
|Date of creation:||01 Jan 1997|
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- H. Peyton Young, 1996. "The Economics of Convention," Journal of Economic Perspectives, American Economic Association, vol. 10(2), pages 105-122, Spring.
- Cosmides, Leda & Tooby, John, 1994. "Better than Rational: Evolutionary Psychology and the Invisible Hand," American Economic Review, American Economic Association, vol. 84(2), pages 327-332, May.
- Armen A. Alchian, 1950. "Uncertainty, Evolution, and Economic Theory," Journal of Political Economy, University of Chicago Press, vol. 58, pages 211-211.
- Jack Hirshleifer, 1984. "On the Emotions as Guarantors of Threats and Promises," UCLA Economics Working Papers 337, UCLA Department of Economics.
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