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Economic Darwinism

Author

Listed:
  • Birgitte Sloth

    (Department of Business and Economics, University of Southern Denmark)

  • Hans Jørgen Whitta-Jacobsen

    (Department of Economics, University of Copenhagen)

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.

Suggested Citation

  • Birgitte Sloth & Hans Jørgen Whitta-Jacobsen, 2006. "Economic Darwinism," CIE Discussion Papers 2006-01, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
    • Handle: RePEc:kud:kuieci:2006-01
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    References listed on IDEAS

    as
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    Cited by:

    1. Hehenkamp, Burkhard & Wambach, Achim, 2010. "Survival at the center--The stability of minimum differentiation," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 853-858, December.

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    More about this item

    Keywords

    evolutionary game theory; Darwinian evolution; economic selection; mutation; evolutionary equilibrium; stochastic stability;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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