3,283 research outputs found
The Evolutionary Stability of Optimism, Pessimism and Complete Ignorance
We provide an evolutionary foundation to evidence that in some situations humans maintain optimistic or pessimistic attitudes towards uncertainty and are ignorant to relevant aspects of the environment. Players in strategic games face Knightian uncertainty about opponents’ actions and maximize individually their Choquet expected utility. Our Choquet expected utility model allows for both an optimistic or pessimistic attitude towards uncertainty as well as ignorance to strategic dependencies. An optimist (resp. pessimist) overweights good (resp. bad) outcomes. A complete ignorant never reacts to opponents’ change of actions. With qualifications we show that optimistic (resp. pessimistic) complete ignorance is evolutionary stable / yields a strategic advantage in submodular (resp. supermodular) games with aggregate externalities. Moreover, this evolutionary stable preference leads to Walrasian behavior in those classes of games
Imitators and Optimizers in Cournot Oligopoly
We analyze a symmetric n-firm Cournot oligopoly with a heterogeneous population of optimizers and imitators. Imitators mimic the output decision of the most successful firms of the previous round a l`a Vega-Redondo (1997). Optimizers play a myopic best response to the opponents’ previous output. Firms are allowed to make mistakes and deviate from the decision rules with a small probability. Applying stochastic stability analysis, we find that the long run distribution converges to a recurrent set of states in which imitators are better off than are optimizers. This finding appears to be robust even when optimizers are more sophisticated. It suggests that imitators drive optimizers out of the market contradicting a fundamental conjecture by Friedman (1953)
How mindless is standard economics really?
Contrary to claims by Gul and Pesendorfer (2008), I show that standard economics makes use of non-choice evidence in a meaningful way. This is because standard economics solely grounded in the theory of choice is "incomplete". That is, it has content that can not be revealed with any general choice procedure.Revealed preference; theory of choice; neuroeconomics; non-choice evidence; machines
On an Evolutionary Foundation of Neuroeconomics
Neuroeconomics focuses on brain imaging studies mapping neural responses to choice behavior. Economic theory is concerned with choice behavior but it is silent on neural activities. We present a game theoretic model in which players are endowed with an additional structure - a simple "nervous system" - and interact repeatedly in changing games. The nervous system constrains information processing functions and behavioral functions. By reinterpreting results from evolutionary game theory (Germano, 2007), we suggest that nervous systems can develop to "function well" in exogenously changing strategic environments. We present an example indicating that an analogous conclusion fails if players can influence endogenously their environment.Neuroeconomic theory; Evolutionary game theory; Learning in games
Preference-Based Unawareness
Morris (1996, 1997) introduced preference-based definitions of knowledge of belief in standard state-space structures. This paper extends this preference-based approach to unawareness structures (Heifetz, Meier, and Schipper, 2006, 2008). By defining unawareness and knowledge in terms of preferences over acts in unawareness structures and showing their equivalence to the epistemic notions of unawareness and knowledge, we try to build a bridge between decision theory and epistemic logic. Unawareness of an event is behaviorally characterized as the event being null and its negation being null.unawareness, awareness, knowledge, preferences, subjective expected utility theory, decision theory, null event
On an Evolutionary Foundation of Neuroeconomics
Neuroeconomics focuses on brain imaging studies mapping neural responses to choice behavior. Economic theory is concerned with choice behavior but it is silent on neural activities. We present a game theoretic model in which players are endowed with an additional structure - a simple ``nervous system'' - and interact repeatedly in changing games. The nervous system constrains information processing functions and behavioral functions. By reinterpreting results from evolutionary game theory (Germano, 2007), we suggest that nervous systems can develop to ``function well'' in exogenously changing strategic environments. We present an example indicating that an analogous conclusion fails if players can influence endogenously their environment.Neuroeconomic Theory, Evolutionary Game Theory, Learning in Games,Neuroeconomic Theory, Evolutionary Game Theory, Learning in Games
The Evolutionary Stability of Optimism, Pessimism and Complete Ignorance
We provide an evolutionary foundation to evidence that in some situations humans maintain optimistic or pessimistic attitudes towards uncertainty and are ignorant to relevant aspects of the environment. Players in strategic games face Knightian uncertainty about opponents' actions and maximize individually their Choquet expected utility. Our Choquet expected utility model allows for both an optimistic or pessimistic attitude towards uncertainty as well as ignorance to strategic dependencies. An optimist (resp. pessimist) overweights good (resp. bad) outcomes. A complete ignorant never reacts to opponents' change of actions. With qualifications we show that optimistic (resp. pessimistic) complete ignorance is evolutionary stable / yields a strategic advantage in submodular (resp. supermodular) games with aggregate externalities. Moreover, this evolutionary stable preference leads to Walrasian behavior in those classes of games.ambiguity, Knightian uncertainty, Choquet expected utility, neo-additive capacity, Hurwicz criterion, Maximin, Minimax, Ellsberg paradox, overconfidence, supermodularity, aggregative games, monotone comparative statics, playing the field, evolution of preferences
The Evolutionary Stability of Optimism, Pessimism and Complete Ignorance
We provide an evolutionary foundation to evidence that in some situations humans maintain optimistic or pessimistic attitudes towards uncertainty and are ignorant to relevant aspects of the environment. Players in strategic games face Knightian uncertainty about opponents’ actions and maximize individually their Choquet expected utility. Our Choquet expected utility model allows for both an optimistic or pessimistic attitude towards uncertainty as well as ignorance to strategic dependencies. An optimist (resp. pessimist) overweights good (resp. bad) outcomes. A complete ignorant never reacts to opponents’ change of actions. With qualifications we show that optimistic (resp. pessimistic) complete ignorance is evolutionary stable / yields a strategic advantage in submodular (resp. supermodular) games with aggregate externalities. Moreover, this evolutionary stable preference leads to Walrasian behavior in those classes of games.ambiguity; Knightian uncertainty; Choquet expected utility; neo-additive capacity; Hurwicz criterion; Maximin; Minimax; Ellsberg paradox; overconfidence; supermodularity; aggregative games; monotone comparative statics; playing the field; evolution of preferences
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