Economic Darwinism

Birgitte Sloth; Hans Jørgen Whitta-Jacobsen

doi:10.1007/s11238-009-9165-z

Economic Darwinism

Birgitte Sloth, Hans Jørgen Whitta-Jacobsen

Department of Economics

2 Citations (Scopus)

Abstract

We define an evolutionary process of "economic Darwinism" for playing the field, symmetric games. The process captures two forces. One is "economic selection": if current behavior leads to payoff differences, behavior yielding lowest payoff has strictly positive probability of being replaced by an arbitrary behavior. The other is "mutation": any behavior has at any point in time a strictly positive, very small probability of shifting to an arbitrary behavior. We show that behavior observed frequently is in accordance with "evolutionary equilibrium", a static equilibrium concept suggested in the literature. Using this result, we demonstrate that generally under positive (negative) externalities, economic Darwinism implies even more under- (over-)activity than does Nash equilibrium.

Original language	English
Journal	Theory and Decision
Volume	70
Issue number	3
Pages (from-to)	385-398
Number of pages	14
ISSN	0040-5833
DOIs	https://doi.org/10.1007/s11238-009-9165-z
Publication status	Published - Mar 2011

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Faculty of Social Sciences

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10.1007/s11238-009-9165-z

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title = "Economic Darwinism",

abstract = "We define an evolutionary process of {"}economic Darwinism{"} for playing the field, symmetric games. The process captures two forces. One is {"}economic selection{"}: if current behavior leads to payoff differences, behavior yielding lowest payoff has strictly positive probability of being replaced by an arbitrary behavior. The other is {"}mutation{"}: any behavior has at any point in time a strictly positive, very small probability of shifting to an arbitrary behavior. We show that behavior observed frequently is in accordance with {"}evolutionary equilibrium{"}, a static equilibrium concept suggested in the literature. Using this result, we demonstrate that generally under positive (negative) externalities, economic Darwinism implies even more under- (over-)activity than does Nash equilibrium.",

keywords = "Faculty of Social Sciences, evolutionary game theory, Darwinian evolution, economic selection, mutation, evolutionary equilibrium, stochastic stability ",

author = "Birgitte Sloth and Whitta-Jacobsen, {Hans J{\o}rgen}",

year = "2011",

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doi = "10.1007/s11238-009-9165-z",

language = "English",

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journal = "Theory and Decision",

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T1 - Economic Darwinism

AU - Sloth, Birgitte

AU - Whitta-Jacobsen, Hans Jørgen

PY - 2011/3

Y1 - 2011/3

N2 - We define an evolutionary process of "economic Darwinism" for playing the field, symmetric games. The process captures two forces. One is "economic selection": if current behavior leads to payoff differences, behavior yielding lowest payoff has strictly positive probability of being replaced by an arbitrary behavior. The other is "mutation": any behavior has at any point in time a strictly positive, very small probability of shifting to an arbitrary behavior. We show that behavior observed frequently is in accordance with "evolutionary equilibrium", a static equilibrium concept suggested in the literature. Using this result, we demonstrate that generally under positive (negative) externalities, economic Darwinism implies even more under- (over-)activity than does Nash equilibrium.

AB - We define an evolutionary process of "economic Darwinism" for playing the field, symmetric games. The process captures two forces. One is "economic selection": if current behavior leads to payoff differences, behavior yielding lowest payoff has strictly positive probability of being replaced by an arbitrary behavior. The other is "mutation": any behavior has at any point in time a strictly positive, very small probability of shifting to an arbitrary behavior. We show that behavior observed frequently is in accordance with "evolutionary equilibrium", a static equilibrium concept suggested in the literature. Using this result, we demonstrate that generally under positive (negative) externalities, economic Darwinism implies even more under- (over-)activity than does Nash equilibrium.

KW - Faculty of Social Sciences

KW - evolutionary game theory

KW - Darwinian evolution

KW - economic selection

KW - mutation

KW - evolutionary equilibrium

KW - stochastic stability

U2 - 10.1007/s11238-009-9165-z

DO - 10.1007/s11238-009-9165-z

M3 - Journal article

SN - 0040-5833

VL - 70

SP - 385

EP - 398

JO - Theory and Decision

JF - Theory and Decision

IS - 3

ER -

Economic Darwinism

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