Keywords: economics, economic policy, economic advice, learning, fairness, cognition, cognitive psychology, anomalies, beliefs, economic experiments, evolution, rationality, expectations

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© by Tilman Slembeck


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Ideologies, Beliefs, and Economic Advice
A Cognitive-Evolutionary View on Economic Policy-Making
paper prepared for the
Conference on Evolutionary Analysis of Economic Policies
4-6 May, 2000 in Bochum / Germany.
Economists usually perceive the “ideological beliefs“ held by political actors as obstacles to rational policy-making. Understanding the roles of ideologies and economic beliefs in the political process, however, enables economists to be more effective in giving economic policy advice. The roles of beliefs, ideologies and economists as policy advisers are discussed in a cognitive-evolutionary framework of the political process.

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Evolution und Lernen im Vergleich
Individuelles Lernen als Voraussetzung für Selbsttransformation
und die Bedeutung von Lernbedingungen
Papier zur Jahrestagung des Ausschusses für Evolutorische Ökonomik
im Verein für Socialpolitik, Schloss Reisensburg, 13. – 15. Juli 2000

Dieses Papier hinterfragt die Übertragung biologischer Evolutionsmodelle auf soziale und ökonomische Systeme und kommt zum Schluss, dass die Selbsttransformation dieser Systeme (U.Witt) nur unzureichend erklärt werden kann, wenn Lernen ausschliesslich auf Ebene der Population modelliert wird. Individuelles Lernen (Denken, Erinnern, Schlussfolgern) wird als zentrales Verbindungselement zwischen passiver Adaption einerseits und aktiver Kreation andererseits diskutiert. Zudem wird argumentiert, dass Lernen kontextabhängig verläuft, sodass im Sinne des "contingent learning" verschiedene in der Literatur vernachlässigte Aspekte - wie Kompexität der Situation, Dependenzgrad, Informationsbedingungen sowie Qualität, Quantität und Inhalt des Feedbacks - zu berücksichtigen sind.

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Evolution und bedingtes Lernen
erscheint 2000 in:
Carsten Herrmann-Pillath und Marco Lehmann-Waffenschmidt (Hrsg.):
Handbuch der evolutorischen Ökonomik (Band II), Springer Verlag.
Veränderungs- und Anpassungsprozesse sind ein zentrales Thema der evolutiven Ökonomik. Sie teilt dieses Interesse mit neueren Ansätzen, welche das Lernen von Individuen und in Populationen zu modellieren versuchen. Motivation ist einerseits die Modellierung jener dynamischen Anpassungsprozesse, welche in der traditionellen Theorie als Rechtfertigung eines statischen Gleichgewichtskonzepts vorausgesetzt werden. Andererseits geht es um die Selektion von Gleichgewichten in Modellen mit mehreren Gleichgewichten.
In diesem Beitrag wird zunächst dargestellt, wie das Phänomen Lernen in den beiden genannten Richtungen aufgefasst wird und welche Berührungspunkte bestehen. Anschliessend wird im Rahmen des Ansatzes bedingten Lernens (contingent learning approach) die Bedeutung von Lernbedingungen diskutiert. Dabei wird deutlich, dass sowohl die traditionellen Modelle als auch evolutive und lerntheoretische Ansätze implizite und empirisch nicht fundierte Annahmen hinsichtlich der Bedingungen von Lernprozessen treffen, die nicht nur “unrealistisch“ sind, sondern den Anwendungsbereich und die Anwendungsvoraussetzungen des Gleichgewichtsansatzes im Dunkeln lassen. Ziel des Ansatzes bedingten Lernens ist einerseits eine reichhaltigere Modellierung von Lernprozessen im Hinblick auf Anwendungen und andererseits eine empirisch fundierte Diskriminierung zwischen den in der Literatur vorgeschlagenen Lernmechanismen

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Learning in Economics: Where Do We Stand?
A Behavioral View on Learning in Theory, Practice and Experiments
Discussion Paper No. 9907, Department of Economics, University of St.Gallen, August 1999.

This paper briefly reviews the current literature on learning in economics from a behavioral point of view. It critically compares theory with aspects of learning in real-life and with evidence from laboratory experiments, and argues that most customary approaches lack criteria for their applicability. Hence, there is a need for a theory that includes criteria when to employ which theory or which element(s) of existing theories contingent on the situation or environment in question. A discussion of several unsolved issues in economic learning stresses the fundamental role of learning conditions that have be neglected in the literature, but are accounted for in behavioral approaches such as “contingent learning“.

JEL Classification: B4, C9, D8
Keywords: economic learning, behavioral economics, economic experiments, game theory, information, feedback, contingent learning

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Low Information Games: 
Experimental Evidence on Learning in Ultimatum Bargaining

Discussion Paper No. 9903, Department of Economics, University of St.Gallen, March 1999.

This paper reports experimental evidence on behaviour in an Ultimatum Game where responders have low structural information and feedback so that they have to learn the nature of the game during repeated play.The results lend support to the view that certain learning conditions are less favourable in terms of individual outcomes than others as suggested by the contingent learning approach (Slembeck, 1998). Furthermore, there is evidence that proposers behave “less fair” when responders lack structural information, which contrasts with common notions of fairness or “manners” in ultimatum bargaining (Camerer and Thaler 1995).

JEL Classification C72, C78, C92
Keywords: bargaining, game theory, contingent learning, asymmetric information, fairness, experiments

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As If Playing Fair 
Experimental Evidence on the Role of Information in Ultimatum Bargaining

mimeo, University College London, June 1998.

This paper addresses two basic questions. First, does fairness play the role it has commonly been attributed in the ultimatum bargaining literature? Second, how do people learn in a game with virtually no information about its structure, and no feedback? The hypothesis is that in some cases like the Ultimatum Game low information may be favourable for low information players in terms of actual payoffs. The results of a laboratory experiment show that in the Ultimatum Game a high number of rejections can be observed under a low information condition where responders have almost no information about the structure of the game, and especially do not know that there is a pie to be split. The data suggest that the traditional interpretation of rejection behaviour in terms of fairness may not be the only valid explanation for the Ultimatum Game, and therefore calls for alternative interpretations. The results have been replicated in a second experiment and lend support to the hypothesis that aspiration levels and associated cut-off strategies are able to capture a wider range of behaviour than theories of fairness, or social utilities. Furthermore, it can be shown that the Ultimatum Game is not a case where low information is favourable.

JEL classification: C9, C72, D83

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 A Behavioral Approach to Learning in Economics-
Towards an Economic Theory of Contingent Learning
first version: Working Paper No. 316, August 1997,
Department of Economics, Universitiy of Pittsburgh, Pittsburgh, PA, 15260, USA.
current version prepared for the European Economic Association Congress, Berlin, September 1998.

In economics, adjustment of behavior has traditionally been treated as a "black box." Recent approaches that focus on learning behavior try to model, test, and simulate specific adjustment mechanisms in specific environments (mostly in games). Results often critically depend on distinctive assumptions, and are not easy to generalize. This paper proposes a different approach that aims to allow for more general conclusions in a methodologically more compatible way. It is argued that the introduction of the main determinants of learning behavior as situational restrictions into the standard economic model may be a fruitful way to capture some important aspects of human behavior that have often been omitted in economic theory. Based on a simple model of learning behavior (learning loop), robust findings from psychology are used to explain behavior adjustment, and to identify its determinants (contingent learning). An integrative methodology is proposed where the "black box" is not opened, but instead the factors that determine what happens inside, and the limits imposed by theses factors can be analyzed and used for model building. The paper concludes with testable hypotheses about learning behavior in the context of economics.

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 The Formation of Economic Policy:
A Cognitive-Evolutionary Approach to Policy-Making
Constitutional Political Economy, 1997, 8(3), 225-254.
[Plaese send me e-mail if you like to have a free copy.]

This essay proposes a cognitive-evolutionary approach to economic policy making where the entire process of policy-formation and implementation is analyzed as a collective process of mobilization and problem-solving that extends from the individual level over the level of collective decision making to the constitutional level. In the procedural view proposed, many issues or problems of economic policy are not fully solved because of four main filters or barriers that filter out certain issues while letting others through. The main task for political entrepreneurs is to surmount these barriers. Important aspects of the politico-economic process are cognitive processes of perception and interpretation by the individual; processes of interpretation, mobilization, and negotiation at the collective level; and evolutionary dynamics at the constitutional level. - This interdisciplinary oriented approach provides a framework that suggests new categories for analyzing policy-making in a systematic way by linking the behavior and thinking of the individual with the ongoing political process at the collective and constitutional level, and leads to conclusions for advising politicians.

JEL classification: A11, D78, D79.

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Reputations and Fairness in Bargaining:
Experimental Evidence from a Repeated Ultimatum Game With Fixed Opponents

Discussion Paper No. 9904, Department of Economics, University of St.Gallen, March 1999.

The results of Ultimatum Game experiments are often quoted as evidence for the role of fairness in bargaining or in economic behaviour more generally. This paper argues that the observed fairness levels are contingent on the traditional experimental design where players are newly matched each round, and reputations are therefore excluded. Evidence from a new experiment shows that average behaviour is more competitive and conflict rates are higher when subjects play against the same opponent repeatedly. This finding is not expected by the traditional fairness hypothesis. A detailed analysis of the dynamics of pairs of players shows that different types of players coexist in the subject pool. Whereas previous experiments found evidence for the existence of “fair” players, the present study reports also a significant number of “tough” players. Hence, there is evidence that allowing for reputations in repeated ultimatum bargaining induces different patterns of behaviour that have not been observed before in this game.

JEL classifications: C72, C78, C92.

Download Paper (reput.pdf, 22 pages, 110 KB)

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Last update: 26 June 2000, created by T.S.