The Harris-Todaro Labor Allocation Mechanism as an Evolutionary Game
The Harris-Todaro model is reinterpreted under an evolutionary game approach, including the behavior of migrants under bounded rationality in a process of imitation or learning. A first feature is an improvement upon Harris-Todaro by replacing the sign-preserving function of the adjustment mechanism by a replicator dynamics. The worker's decision to migrate to the urban area depends upon the expected differential between urban and rural wage. However, the probability associated to getting a job in the traditional, or formal, sector, which defines the expected urban wage, is itself endogenous, since it is affected by migration. Besides, the worker is myopic in forming expectations, having only one period as the planning horizon. This implies bounded rationality on the part of the migrant worker. The migratory movement of workers is interpreted as a process of imitation or learning. A second basic feature of the model is an interpretation of the equilibrium condition as a mixed strategy equilibrium of an evolutionary game. In this game, a replicator dynamics is a result instead of a postulate, as is the case of the dynamic adjustment mechanism of the original model. Here it appears as a spontaneous result from the interaction of heterogeneous workers
|Date of creation:||11 Aug 2004|
|Contact details of provider:|| Phone: 1 212 998 3820|
Fax: 1 212 995 4487
Web page: http://www.econometricsociety.org/pastmeetings.asp
More information through EDIRC
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.:
- Jorgen W. Weibull, 1997. "Evolutionary Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262731215, July.
- Carrington, William J & Detragiache, Enrica & Vishwanath, Tara, 1996. "Migration with Endogenous Moving Costs," American Economic Review, American Economic Association, vol. 86(4), pages 909-930, September.
When requesting a correction, please mention this item's handle: RePEc:ecm:latm04:133. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum)
If references are entirely missing, you can add them using this form.