A fresh look on economic evolution from kinetic viewpoint

The present paper makes a contribution to fill in a gap left open by dynamic theory and evolutionary economics as well. While the "closed loop" dynamic theory has explanation power in analyzing evolving economic systems at the price of neglecting the possible occurrence of non anticipated novelties, "open loop" evolutionary economics is subject to the converse trade-off. Basing on a general equilibrium model by T. Kehoe including production and taxes we provide a formal model of an evolving economy fully accounting for the appearance of novelty. From this emerges in a natural way the notion of an open loop evolution equilibrium. It is based on arguments from the gradual vs. bang-bang tax reform controversy and from the debate on optimal macroeconomic policy design. Existence of equilibrium is established extending an analytical result which in a different context and independently has been proved by Mas- Colell and by the author. We use the term "kinetic" to indicate that in contrast to traditional comparative statics our approach neither hinges on the uniqueness of equilibria, nor is it confined to the analysis of prescribed parameter variations. --evolution,equilibrium,equilibrium price path,frictionless tuning of control parameters

A note on continuously decomposed evolving exchange economies

It is routine to demonstrate in the exchange economy framework that small changes of individual preferences and endowments always result in small changes of the derived excess demand functions as one should expect. Though being as desirable for reasons of the consistency of the whole approach, however, a precise proof of the converse direction so far is still open to question. The present paper shows that it is actually true. We use a decomposition method for aggregate excess demand functions developed by Mas-Colell which is derived from the well-known decomposition method developed by Sonnenschein and perfected by Debreu and Mantel. Our result fills in a notorious gap in the line of economic justification usually given for this decomposition method. --continuous decomposition,aggregate excess demand

Self-Referential Optimal Advising When Reactions are Delayed

Like social predictions also advices addressed to the relevant agents may influence their subject and consequently may be liable to self-referentiality effects. It is a well-known phenomenon that decisionmakers tend to delay the execution of a given advice the more the less urgent the underpinning arguments appear to be to them. Particularly, this can be observed in economic and in environmental policy. What should a professional adviser do? It is the purpose of this study to provide an analytical framework in which a professional adviser's objectives are analyzed. Naturally, his first objective is to choose such an advice and such underpinning arguments that the advice really will be taken by the addressed agents (argument justification objective). This is closely related to the problem of the predictability of social events which for the first time has rigorously been analyzed by Grunberg and Modigliani in 1954. The adviser's second objective of being right with his underpinning arguments and his third objective, i.e. his potential self-interest in the ultimate outcome, will be taken into account in this study by means of a subjective utility function. This approach can be seen as complementary to the literature on strategic information transmission and credibility. --delayed reaction function,self-referentiality,argument justification,social reputation

Deceleration - Revealed Preference in Society and Win-Win-Strategy for Sustainable Management. Concept and Exprimental Evidence

Until recently "deceleration" has been little recognized as a technical term, or as an idea. However, it seems to be getting more attention now. For example the German magazine STERN dedicated a cover story to deceleration, in the Anglo-American world the "Quiet Life Hypothesis" is gaining followers, the "Heidelberger Club für Wirtschaft und Kultur" dedicated its annual meeting in 1998 to deceleration, and the competition for the German Study Award of the Körber Foundation in 2002 had the motto "Speed – the accelerated world." In Italy you can even study "Slow Food" and along German motorways you find signs with the slogan "be relaxed - just discover." Without any doubt, time is a decisive factor for the productivity and competitive advantages of companies. But more speed by continual, or even accelerated, acceleration may well be counter-productive and lead to an "acceleration paradox" - for example by product life cycles that are too short and therefore increase the share of R&D-costs or by "Pyrrhus" victories, that lead to "the winner's curse" instead of a stable market position. This acceleration paradox may show up in consumption, too. Consuming requires time and therefore competitors not only fight for their share of the consumers' cost budget, but also for their share of the consumers' time budget. It is this time budget, that must be split up into productive, consumptive and in all other leisure activities, such as going for a walk or playing chess, that are neither productive nor consumptive in an economic sense. The wide range of consumption goods in narrow markets and the increase in consumed goods and services together with the already mentioned shorter life cycles, e.g. of computers, cell phones or electronic equipment, are perceived by the consumers more and more as acceleration and personal burden. Speed can threaten the "happiness" of the consumers and so acceleration may become an "acceleration trap" for business and society. The term "deceleration" seems to be adequate for describing the opposite of acceleration. But is there truly a preference for deceleration in the society, and can deceleration become a paradigm in business management? These questions give the impulse for the research presented here by asking four questions and providing first answers: What are the reasons for acceleration in business and society? What have been the consequences of acceleration so far? Can deceleration contribute to sustainable management? Is there a preference for deceleration in society, and how can it be measured? --Deceleration,Sustainable Management,Experimental Economics

Coalition formation in multilateral negotiations with a potential for logrolling: An experimental analysis of negotiators' cognition processes

In the present study we analyse the topic of coalition formation in multi-issue multilateral negotiations under different voting rules when there is the opportunity of logrolling. We have carried out 3 experiments and compare our findings with the standard public choice theory predictions. In the first experiment we have shown that in a situation of 3-issues and 3-parties negotiations with majority rule, most of the subjects behave in a satisficing, not in a optimizing, way. They are found to be subject to a "Zone of Agreement Bias" (ZAB) which induces them to form suboptimal coalitions and to choose Pareto-dominated agreements. Moreover, we find that the cycling problem predicted by public choice theory in most cases does not arise. In experiment 2 we have shown that the adoption of the unanimity, instead of the majority, rule reduced the suboptimizing effect of the ZAB, and produced a much higher rate of optimal agreements. Experiment 3 shows that the results obtained in experiments 1 and 2 hold even when the level of complexity of the negotiation problem increases. To this aim we considered a situation of four-issues and four-parties negotiations under both the majority and the unanimity rule. --

Deceleration: Revealed Preference in Society and Win-Win-Strategy for Sustainable Management

Until recently "deceleration" has been little recognized as a technical term or as an idea, but now it seems to be getting more attention. Despite time is a decisive factor for the productivity and competitive advantages of companies continual acceleration may well be counter-productive and lead to an "acceleration paradox" – more of it not always is better. Three levels of the emergence and spread of the acceleration phenomenon can be distinguished: the macroeconomic, the microeconomic, and the motivational and behavioural level, all of them bearing, however, the danger of an "acceleration trap". Despite possible damages of acceleration deceleration processes usually seem only to be accepted if they are win-win strategies, i.e., if they have a positive impact on ecological and human targets and foster company interests at the same time. The study provides three case studies where win-win situations are realized. Going one step further, however, one can also find a preference for deceleration of agents if deceleration and economic goals are conflicting. How can the agents' willingness to pay for deceleration in such trade-off situations be measured? We do a first step in his direction with three experiments which were conducted at the Technical University of Dresden. In the first experimental setting the subjects are confronted with a trade-off between gaining a possibly higher financial reward by solving mental exercises more quickly and decelerating by taking refreshment brakes during the exercises at the expense of a potentially lower reward. In the second and the third settings subjects are virtually offered an accelerated and a decelerated alternative (more stress for higher income; more stress for faster technical progress of personal computers). The empirical evidence of all three experiments are fully consistent with the expectation that deceleration has a positive value to the subjects. --Acceleration,deceleration,acceleration trap,win-win strategy,individual willingness to pay

Eligibility Traces and Plasticity on Behavioral Time Scales: Experimental Support of neoHebbian Three-Factor Learning Rules

Most elementary behaviors such as moving the arm to grasp an object or walking into the next room to explore a museum evolve on the time scale of seconds; in contrast, neuronal action potentials occur on the time scale of a few milliseconds. Learning rules of the brain must therefore bridge the gap between these two different time scales. Modern theories of synaptic plasticity have postulated that the co-activation of pre- and postsynaptic neurons sets a flag at the synapse, called an eligibility trace, that leads to a weight change only if an additional factor is present while the flag is set. This third factor, signaling reward, punishment, surprise, or novelty, could be implemented by the phasic activity of neuromodulators or specific neuronal inputs signaling special events. While the theoretical framework has been developed over the last decades, experimental evidence in support of eligibility traces on the time scale of seconds has been collected only during the last few years. Here we review, in the context of three-factor rules of synaptic plasticity, four key experiments that support the role of synaptic eligibility traces in combination with a third factor as a biological implementation of neoHebbian three-factor learning rules

Kontingenz und Kausalität bei evolutorischen Prozessen

Daß ökonomische Prozesse zu den primären evolutorischen Untersuchungsgegenständen gehören und wie alle handlungserzeugten Prozesse, die nicht antizipierte Neuheiten hervorrufen können, grundsätzlich als verlaufs- und ergebnisoffen zu konzipieren sind, ist unstrittig. Um den Problemen des vom evolutorischen Ansatz dafür vorwiegend benutzten Analysekonzepts des Variations-Selektions-Retentions-Schemas aus dem Weg zu gehen (z.B. Tautologie-Problem, Dr.-Pangloss-Problem), wird in diesem Beitrag als alternatives Analysekonzept der in der Erkenntnistheorie entwickelte und u.a. in der Evolutionsbiologie verwendete Kontingenzansatz vorgeschlagen. Der Kontingenzansatz charakterisiert die Zwischengrade der kausalen Verursachung von Ereignissen oder Zuständen eines Prozesses zwischen den beiden Extremen der Determiniertheit und der vollständigen Unabhängigkeit. Es ist das Ziel dieser Untersuchung, zu zeigen, welchen Beitrag das Kontingenzkonzept mit Hilfe einer geeigneten Formalisierung zur Kausalitätsanalyse von verlaufs- und ergebnisoffenen Prozessen aus dem ökonomischen Gegenstandsbereich leisten kann. Antworten auf Fragen nach den verursachenden Faktoren und Kausalzusammenhänge innerhalb von Prozeßverläufen sind nicht nur für die Analyse historischer und aktueller Prozesse von Bedeutung, sondern ebenso für die theoretisch-analytische ökonomische Analyse. Im letzten Teil der Arbeit werden die Beziehungen zwischen der Neuen Wirtschaftsgeschichte (oder Kliometrie)und dem Kontingenzansatz sowie als weiteres Anwendungsfeld das Phänomen der Prognosewirkungen untersucht. Es zeigt sich u.a., daß das Phänomen der "reflexiven Prognosen" mit Hilfe des Kontingenzkonzepts nicht nur beschrieben, sondern auch analytisch systematisiert und damit besser verstanden werden kann. --

Konstruktivismus und evolutorische Ökonomik

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