Université de Lausanne
Ecole des HEC
Département d'économétrie et d'économie politique

SEMINAIRE BROWNBAG

Wednesday February 27, 2008, 12:00
Internef, room 123

Charles EFFERSON (University of Zürich) & Rafael LALIVE (University of Lausanne)

Information dynamics in risky worlds: experimental studies of ethnic marking and payoff-biased social learning

Abstract 1: The human population is subdivided into groups demarcated according to dress, dialect, and other symbolic markers of group affiliation. The resulting ethnic boundaries can become the basis for parochial behaviors ranging from social and economic discrimination to nationalism, religious wars, and genocide. The existence of groups also plays an important role in group selection theories of human altruism, but little is known about the dynamics behind group formation. Group selection theories assume but do not explain the presence of groups. We show experimentally that arbitrary symbolic markers, though initially meaningless, can evolve endogenously in a way that helps individuals facing a coordination problem assort into groups characterized by distinct behavioral norms. This dynamic arises because subjects show a strong tendency to package symbolic markers and behavioral norms together and to interact preferentially with others having the same marker. These individual tendencies create a shared language as symbolic markers become increasingly meaningful as reliable predictors of behavior in the coordination game. At the aggregate level, the final outcome is a set of endogenously formed ethnic groups defined by a symbolically marked boundary. These results support evolutionary theories of ethnic marking and provide a foundation for group selection theories of human altruism.

Abstract 2: Theory shows that the structure of social learning should be critically important to the evolution of norms and behaviors in human societies. Imitating success is a type of payoff-dependent social learning that has received considerable attention, but other types of payoff-dependent social learning are also feasible. Avoiding unsuccessful behaviors, for example, can have theoretical advantages under certain circumstances. We conducted an experiment that allowed players to choose between learning about either successful or unsuccessful behaviors. In addition, the experiment allowed us to describe precisely how players used this social information by separating individual learners and social learners. Players chose between two technologies repeatedly. Payoffs were random, but one technology had a higher expected payoff. Individual learners knew their realized payoffs after each choice, while in each period social learners could only choose to know one of the following: a) the technology producing the highest payoff among individual learners or b) the technology producing the lowest payoff. Social learners never knew their realized payoffs. When social learners chose to know the technology producing the highest payoff, a model of imitating this successful behavior matches the data very closely. When social learners chose to know the technology producing the lowest payoff, which they did roughly a quarter of the time, they tended to choose the opposite technology in early periods, while increasingly choosing the same technology in late periods. This use of social information improved the performance of social learners relative to simply randomizing over the two technologies, but it was not theoretically optimal.

Web site of the seminar (with paper online): http://www.hec.unil.ch/deep/evenements-english/e-sem-all-2007-08.htm

eptembre 2007, 12h15
Internef, salle 123

Francesco FURLANETTO
(CREI, Barcelona and Norges Bank, Oslo)

Rule-of-thumb Consumers
and the Business Cycle

Abstract

In this paper we study the transmission mechanism of productivity shocks in a model with rule-of-thumb consumers. In the literature, this financial friction has been studied only with reference to fiscal shocks. As a consistency exercise we show that the presence of rule-of-thumb consumers is very helpful also in accounting for recent influential empirical evidence on productivity shocks. Rule-of-thumb agents, together with nominal and real rigidities, play an important role in explaining the negative reponse of hours and the zero reponses of output and consumption after a productivity shock.

Site web du séminaire (avec texte en ligne): http://www.hec.unil.ch/deep/evenements/Brownbag2007-08.htm