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Cooperation and Cultural Transmission in a Coordination Game

  • Olcina Vauteren Gonzalo

    ()

    (ESTRUCTURA DE RECERCA INTERDISCIPLINAR, COMPORTAMENT ECONÒMIC - SOCIAL (ERI - CES) UNIVERSITY OF VALENCIA)

  • Calabuig Alcántara Vicente

    ()

    (ESTRUCTURA DE RECERCA INTERDISCIPLINAR, COMPORTAMENT ECONÒMIC-SOCIAL (ERI-CES) UNIVERSITY OF VALENCIA)

We present an overlapping generations model with cultural transmission of preferences, in which players face in each period a two-stage coordination game that consists of a production stage followed by a distribution phase. In the globally stable steady state of society, there will be a mixed distribution of preferences where both selfish and other-regarding preference sare present and, more importantly, players coordinate on the cooperative equilibrium of the coordination game. The presence of a significant fraction of individuals with other-regarding preferences acts as a stock of social capital in the society, reducing personal risk. If the proportion of selfish individuals in the initial condition of the dynamics is very high, there is still multiplicity of equilibria. We show that if there is heterogeneity in the behavior among groups and a positive rate of migration, then all groups will converge to the cooperative result.

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Paper provided by Fundacion BBVA / BBVA Foundation in its series Working Papers with number 201066.

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Length: 49
Date of creation: Mar 2007
Date of revision:
Handle: RePEc:fbb:wpaper:201066
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  1. Bisin, A. & Verdier, T., 1997. "The Economics of Cultural Transmission and the Dynamics of Preferences," DELTA Working Papers 97-03, DELTA (Ecole normale supérieure).
  2. Charness, Gary B & Rabin, Matthew, 2001. "Understanding Social Preferences With Simple Tests," University of California at Santa Barbara, Economics Working Paper Series qt0dc3k4m5, Department of Economics, UC Santa Barbara.
  3. Herbert Dawid and Bentley MacLeod, 2001. "Holdup and the Evolution of Bargaining Conventions," Computing in Economics and Finance 2001 104, Society for Computational Economics.
  4. Fehr, Ernst & Schmidt, Klaus M., . "A theory of fairness, competition, and cooperation," Chapters in Economics, University of Munich, Department of Economics.
  5. Bisin, A. & Verdier, T., 1999. "Beyond the Melting Pot : Cultural Transmission, Marriage, and the Evolution of Ethnic and Religious Traits," DELTA Working Papers 1999-10, DELTA (Ecole normale supérieure).
  6. Matthew Rabin., 1992. "Incorporating Fairness into Game Theory and Economics," Economics Working Papers 92-199, University of California at Berkeley.
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  8. Bisin, A. & Verdier, T., 1997. "On the Cultural Transmission of Preferences for Social Status," DELTA Working Papers 97-04, DELTA (Ecole normale supérieure).
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  13. Concepción Peñarrubia & Gonzalo Olcina, 2002. "Specific investments and coordination failures," Economics Bulletin, AccessEcon, vol. 3(2), pages 1-7.
  14. William H. Sandholm, 2001. "Preference Evolution, Two-Speed Dynamics, and Rapid Social Change," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(3), pages 637-679, July.
  15. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
  16. Glen Ellison, 2010. "Learning, Local Interaction, and Coordination," Levine's Working Paper Archive 391, David K. Levine.
  17. Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993. "Learning, Mutation, and Long Run Equilibria in Games," Econometrica, Econometric Society, vol. 61(1), pages 29-56, January.
  18. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
  19. Mengel, Friederike, 2008. "Matching structure and the cultural transmission of social norms," Journal of Economic Behavior & Organization, Elsevier, vol. 67(3-4), pages 608-623, September.
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