Author :
Publisher :
ISBN 13 :
Total Pages : 119 pages
Book Rating : 4.:/5 (88 download)
Book Synopsis Preference Evolution, Social Preferences and Cultural Heterogeneity by :
Download or read book Preference Evolution, Social Preferences and Cultural Heterogeneity written by and published by . This book was released on 2014 with total page 119 pages. Available in PDF, EPUB and Kindle. Book excerpt: The first chapter argues that the evolution of preferences can serve as an important channel through which different political institutions affect economic outcomes in different societies. We develop a framework in which a majority preference group and an alternative preference group interact in the context of a political institution that determines the allocation of positions in the social hierarchy. We employ this framework to study how conducive different political institutions are to spreading preferences that induce efficiency. We find that any preference can be prevalent under "exclusive" political institutions. Therefore, a society can be trapped in a state in which preferences associated with unfavorable economic outcomes persist. On the other hand, preference evolution under "inclusive" political institutions has strong selection power and only preferences that locally have a comparative advantage in holding a high position can be prevalent. The second chapter posits that in games with more than two players, indirect higher order beliefs can affect the behavior of players who do not interact sequentially. We apply psychological game theory to study a three-player sequential game where the third player's decision to help or hurt the first player depends on his belief about what the first player believes the second player would choose. We test the model experimentally by manipulating the third player's indirect higher order belief through different forms of communication and show that the results are consistent with the model's predictions. The third chapter proposes a cultural transmission model in which cultural institutions can actively invest in organizing social events to increase the social connections among younger members of their cultural groups so that these younger members have stronger tendencies to match with each other in economic activities when they enter their adult period. This investing behavior may affect members' incentives to inculcate their own cultural traits to their children and lead to heterogeneous distribution of cultural traits in the population. Therefore, the model provides an alternative explanation for cultural heterogeneity, which is different from the existing literature which attributes cultural heterogeneity mainly to "cultural distaste."
