Max Planck Institute of Economics - The Evolutionary Economics Group

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Papers 2009
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Papers 2009 Top

#0912 (PDF)
S. Bhaduri, H. Kumar
Tracing The Motivation To Innovate: A Study Of 'Grassroot' Innovators In India: Extrinsic motivations like intellectual property protections and fiscal incentives continue to occupy the centre stage in debates on innovation policies. Joseph Schumpeter had, however, argued that the motive to accumulate private property can only explain part of innovative activities. In his view, "the joy of creating, of getting things done" associated with the behavioural traits that "seek out difficulties…and takes delight in ventures" stand out as the most independent factor of behaviour in explaining the process of economic development, especially in early capitalist societies. Taking the case of 'grassroot' innovators in India, we re-examine the motivations behind innovative behaviour. We draw upon the literature on effectance motivation theory to construct operational indicators of extrinsic and intrinsic motivations. Interestingly, we find that pure extrinsic forms of motivation drive only a fraction of individual innovative behaviour. Also, importance of intrinsic motivation in guiding innovative behaviour is found to high when uncertainty is high. We accordingly draw a few policy implications.

#0911 (PDF)
K. Knottenbauer
Recent Developments in Evolutionary Biology and Their Relevance for Evolutionary Economics: The paper gives attention to the question of whether the development of evolutionary theories in biology over the last twenty years has any implications for evolutionary economics. Though criticisms of Darwin and the modern synthesis have always existed, most of them have not been widely accepted or have been absorbed by the mainstream. Recent findings in evolutio¬nary biology have started to question again the main principles of the modern synthesis. These findings suggest amongst others that the phenomena of co-operation, communication, and self-organization have been under-estimated, and that selection is not the predominant factor of evolution, but only one among many. Thus, in evolutionary economics, the question is whether the popular variation-retention-selection principle is still up to date. The implications for evolutionary economics with respect to analogies, generalized Darwinism, and the continuity hypothesis are also addressed.

#0910 (PDF)
C. Schubert
Darwinism in Economics and the Evolutionary Theory of Policy-Making: According to the advocates of a "Generalized Darwinism" (GD), the three core Darwinian principles of variation, selection and retention (or inheritance) can be used as a general framework for the development of theories explaining evolutionary processes in the socioeconomic domain. Even though these are originally biological terms, GD argues that they can be re-defined in such a way as to abstract from biological particulars. We argue that this approach does not only risk to misguide positive theory development, but that it may also impede the construction of a coherent evolutionary approach to "policy implications". This is shown with respect to the positive, instrumental and normative theories such an approach is supposed to be based upon.

#0909 (PDF)
J. S. Metcalfe
Technology and Economic Theory: Technology and technological change play a central role in economics, whether in the theory of resource allocation or in the theory of growth and development. Yet the nature of technology is largely ignored in economic theory, it being considered sufficient to treat technology as a constraint on productive opportunities. This short essay delves a little deeper into the nature of technology and the material, energy and information transformation processes that it represents. A deeper understanding of technology leads to a deeper understanding of the main currents of technological advance and to the reasons why the development of technology and its application are so uneven over time and place.

#0908 (PDF)
J. Schnellenbach, T. Baskaran, L.P. Feld
Creative Destruction and Fiscal Institutions: A Long-Run Case Study of Three Regions: We analyze the rise and decline of the steel and mining industries in the regions of Saarland, Lorraine und Luxemburg over a long period, from the mid-19th century to 2003. Our main focus in on the period of structural decline in these industries after the second world war. Differences in the institutional framework of these regions are exploited to analyze how the broader fiscal constitution sets incentives for governments to either obstruct or to encourage structural change in the private sector. Our main result is that fiscal autonomy of a region subjected to structural change in its private sector is associated with a relatively faster decline of employment in the sectors affected. Contrary to the political lore, fiscal transfers are not used to speed up the destruction of old sectors, but rather to stabilize incomes.

#0907 (PDF)
E. Stam
Entrepreneurship, Evolution and Geography: Entrepreneurship is a fundamental driver of economic evolution. It is also a distinctly spatially uneven process, and thus an important explanation of the uneven economic development of regions and nations. Not surprisingly, entrepreneurship is a key element of evolutionary economics (Schumpeter 1934; Witt 1998; Grebel et al. 2003; Metcalfe 2004; Grebel 2007) and has been recognized as an important element in explaining (regional) economic development (Acs and Armington 2004; Audretsch et al. 2006; Fritsch 2008). This means that the explanation of regional variations in entrepreneurship has also become an important issue. Even more so because there are pronounced differences within and between nations in rates of entrepreneurship and in their determinants (Bosma and Schutjens 2008), and these differences tend to be persistent over time, reflecting path dependence in industry structure (Brenner and Fornahl 2008), institutions (Casper 2007) and culture (Saxenian 1994) that vary widely across regions and countries, but are relatively inert over time. Introducing entrepreneurship into evolutionary economic geography means that the traditional focus on firms is complemented with a focus on individuals.
This paper is an inquiry into the role of entrepreneurship in evolutionary economic geography. The focus is on how and why entrepreneurship is a distinctly spatially uneven process. We will start with a discussion on the role of entrepreneurship in the theory of economic evolution. Next, we will review the empirical literature on the geography of entrepreneurship. The paper concludes with a discussion of a future agenda for the study of entrepreneurship within evolutionary economic geography.

#0906 (PDF)
F. Neffke, M. Svensson Henning
Skill-relatedness and firm diversification: The concept of "relatedness" between industries plays an increasingly central role in economics and strategic management. However, relatedness has remained rather elusive in empirical terms. In this article, we investigate relatedness between industries in terms of the extent to which the same human capital can be employed in different industries. In particular, we investigate the skill-relatedness among different industries by investigating labor flows between industries.
The data used are Swedish employer linked data on individuals. Our statistical framework assesses the degree to which labor flows between pairs of industries are in excess of expected levels and use this as a quantification of Revealed Skill Relatedness. A network picture of 435 4-digit industries and the relatedness linkages between them shows that the relations among industries are far more complex than the industrial classification system suggests. Moreover, when investigating corporate diversification, we find that firms are far more likely to diversify into industries that are strongly skill-related to their core activities industries than into unrelated industries.

#0905 (PDF)
Z. Babutsidze
Learning How to Consume and Returns to Product Promotion: This paper presents the computational model of consumer behaviour. We consider two sources of product specific consumer skill acquisition, termed here as learning how to consume: learning by consuming and consumer socialization. Consumers utilize these two sources in order to derive higher valuations for products they are consuming. In this framework we discuss the behavior of returns to product promotion relative to the changes in product characteristics, such as quality and user-friendliness, as well as in case of varying intensity of consumer socialization. The main finding is that in case of duopoly the dependence of returns to advertising on product quality is not monotonic as it has been claimed by earlier studies. Additional important finding indicating the importance of the models with interacting agents is that returns to advertising exhibit qualitatively different behavior in case of zero intensity of consumer socialization.

#0904 (PDF)
M. Binder, A. Coad
An Examination of the Dynamics of Happiness Using Vector Autoregressions: We use a panel vector autoregressions model to examine the coevolution of changes in happiness and changes in income, health, marital status as well as employment status for the British Household Panel Survey (BHPS) data set. This technique allows us to simultaneously analyze the impact of the aforementioned factors on each other. We find that increases in happiness are associated with subsequent increases in income, marriage, employment, and health variables, while increases in the these life-domain variables (except health) tend to be followed by decreases in happiness in subsequent periods, suggesting adaptation dynamics in all domains. These findings are quite robust to different model specifications.

#0903 (PDF)
C. Schubert
Is Novelty always a good thing? Towards an Evolutionary Welfare Economics: Schumpeter's and Hayek's view of market coordination as being not about efficiency, but about endogenous change and never-ending discovery has been increasingly recognized even by the mainstream of economics. Underlying this view is the notion of creative learning agents who bring about novelty. We argue that apart from the challenges it poses for positive theorizing, novelty (be it technological, institutional or commercial) also has a complex normative dimension that standard welfare economics is unsuited to deal with. We show that welfare economics has to be reconstructed on the basis of evolutionary-naturalistic insights into the way human agents bring about, value and respond to novelty-induced change.

#0902 (PDF)
Jeroen C.J.M. van den Bergh, G. Kallis
Evolutionary Policy: We explore the idea of public policy from the perspective of evolutionary thinking. This involves paying attention to concepts like diversity, population, selection, innovation, coevolution, group selection, path-dependence and lock-in. We critically discuss the notion of evolutionary progress. The relevance of evolutionary dynamics is illustrated for policy and political change, technical change, sustainability transitions and regulation of consumer behaviour. A lack of attention for the development of evolutionary policy criteria and goals is identified and alternative choices are critically evaluated. Finally, evolutionary policy advice is compared with policy advice coming from neoclassical economics, public choice theory and theories of resilience and adaptive management. We argue that evolutionary thinking offers a distinct and useful perspective on public policy design and change.

#0901 (PDF)
A. Lorentz
Evolutionary Micro-founded Technical Change and The Kaldor-Verdoorn Law: Estimates from an Artificial World: This paper proposes to identify the micro-level sources for the dynamic increasing returns occurring at an aggregate level. The paper reverts to a micro model of technological change in-line with the evolutionary literature on industrial dynamics. The data generated through numerical simulations are used to identify the sources of increasing returns as measured by the Kaldor-Verdoorn Law. In this respect we also aim to provide some plausible micro-foundations to this Law. The paper shows that: (i) Dynamic increasing returns appear as an emergent property of the model; (ii) micro-characteristics of technical change, as the amplitude and the frequency of changes, as well as selection mechanisms significantly shape these increasing returns.

Papers 2008 Top

#0818 (PDF)
A. Chai, A. Moneta
Satiation, Escaping Satiation, and Structural Change: Some Evidence from the Evolution of Engel Curves: Certain properties of Engel curves have been linked to the occurrence of structural change in the economy (Pasinetti 1981, Metcalfe et al. 2006, Saviotti 2001). From an empirical perspective, however, very little has been done to examine (i) whether indeed satiation is a general property of Engel curves; (ii) whether the rate at which Engel curves converge to satiation may significantly change over time; and (iii) how stable Engel curves are across time such that it may be appropriate to use them to make predictions about structural change. Using data from the UK Family Expenditure Survey, this paper examines these three issues.

#0817 (PDF)
P. Pelikan
How to generalize Darwinism suitably to help understand both the evolution and the development of economies: This paper agrees that a suitably generalized Darwinism may help understand socioeconomic change, but finds the most publicized generalization by Hodgson and Knudsen unsuitable. To do better, it generalizes the extension of Neo-Darwinism into evolutionary developmental biology ("evo-devo"), which pays more attention to genomes-as-instructors than to genes-as-replicators, and to the entire process of instructed development than to fully developed organisms. The new generalization has clear connections to economics with a minimum guarantee of helpfulness: it generalizes both evo-devo and previously elaborated approaches that already helped understand specific issues of comparative economics, economic reforms, and transformation policies.

#0816 (PDF)
D. Fornahl, C. Guenther
Persistence and Change of Regional Industrial Activities – The Impact of Diversification in the German Machine Tool Industry: The paper Investigates stability and change of regional economic activities in the long-run. As the unit of analysis we selected the machine tool industry in West Germany for the years 1953 to 2002. We spot a strong variance in the activities between the different regions. These differences are relatively stable over time and the regional activities are rather path-dependent. Nevertheless, the paper also identifies changes in the level of activities. As the main driving factors for these changes we examine the effect of regional diversification strategies. We find that those regions pursuing a general diversification strategy have a higher likelihood to grow than regions which are specialising. Furthermore, diversification into totally new technological and product fields is only beneficial under specific circumstances based on technological and market developments. Hence, in most cases a broad diversification is superior to one focusing on new state-of-the-art technological fields.

#0815 (PDF)
U. Witt
Symbolic Consumption and the Social Construction of Product Characteristics: As recognized since long, consumption serving to signal social status, group membership, or self-esteem is a socially contingent activity. The corresponding expenditures are motivated mainly by the symbolic value they have for transmitting the signal. However, this presupposes some form of social coordination on what are valid, approved symbols. Unlike consumption not serving signaling purposes, the technological characteristics of the goods and services consumed may be secondary – what counts is their socially agreed capacity to function as a symbol. The paper discusses in detail the cognitive underpinnings of social agreement on consumption symbols and a model of their spontaneous emergence.

#0814 (PDF)
G. Buenstorf, M. Geissler
The Origins of Entrants and the Geography of the German Laser Industry: Entry into an industry often clusters in regions where the industry is already concentrated, which is suggestive of agglomeration economies. Regional public research activities may exert another attracting force on entrants into science-based industries. Empirically these proximity effects are confounded by other influences on where entrants originate and locate. This paper begins to disentangle the effects of agglomeration, public research, and the supply of capable entrants for the German laser industry. Our findings indicate that the industry's geography was shaped by the local availability of potential entrants rather than localization economies. The impact of public research increased over time.

#0813 (PDF)
T. Ciarli, A. Lorentz, M. Savona, M. Valente
The Effect of Consumption and Production Structure on Growth and Distribution. A Micro to Macro Model: The paper contributes to the literature on the relation between structural changes in demand and supply and growth. We develop a macro-economic model with agent-based micro-foundations that articulates the links between production and organisational structures on the supply side, and the endogenous evolution of income distribution on the demand side. The model contains a simplified, though robust, representation of individual firms in the final goods and capital sectors and classes of workers/consumers. The results, in addition to addressing the technical issue of the model's robustness, illustrate the micro- and meso-properties of the simulated growth patterns. In particular, we observe and explain the interactions between technological change, firm organisation, income distribution, consumption behaviour and growth. The analysis performed on the simulated results broadly confirms and further extends the empirical evidence presented in the literature.

accepted for publication in Metroeconomica

#0812 (PDF)
B. Nooteboom
In what sense do firms evolve?: Does evolutionary theory help, for a theory of the firm, or, more widely, a theory of organization? In this paper I argue that it does, to some but also limited extent. Evolutionary theories of economies, and of culture, have acquired considerable following, but have also been subject to considerable criticism. Most criticism has been aimed at inappropriate biological analogies, but recently it has been claimed that a 'universal Darwinism', purged of all such mistaken analogy, is both useful and viable. Why should we try to preserve evolutionary theory, and will such theory stand up to sustained critical analysis? How useful is it for theory of the firm? Evolutionary theory appears to be the most adequate theory around for solving the problem of agency and structure, avoiding both an overly rational, managerial 'strategic choice' view of organizations and a 'contingency' view of organizations as fully determined by their environment. Whether universal Darwinism stands up to critical analysis remains to be seen. Here, the focus is on evolutionary theory of organization and of knowledge. Use is made of a constructivist 'embodied cognition' view of cognition and of elements of a cognitive theory of the firm.

#0811 (PDF)
R. Joosten, B. Roorda
Generalized projection dynamics in evolutionary game theory: We introduce a new kind of projection dynamics by employing a ray-projection both locally and globally. By global (local) we mean a projection of a vector (close to the unit simplex) unto the unit simplex along a ray through the origin. Using a correspondence between local and global ray-projection dynamics we prove that every interior evolutionarily stable strategy is an asymptotically stable fixed point. We also show that every strict equilibrium is an evolutionarily stable state and an evolutionarily stable equilibrium. Then, we employ several projections on a wider set of functions derived from the payoff structure. This yields an interesting class of so-called generalized projection dynamics which contains best-response, logit, replicator, and Brown-Von-Neumann dynamics among others.

#0810 (PDF)
J.S.Woersdorfer
From Status-Seeking Consumption to Social Norms. An Application to the Consumption of Cleanliness: Interdependencies in consumer behavior stem from either status-seeking consumption or compliance with social norms. This paper analyzes how a consumption act changes from a means to signal the consumer's status to a means of norm compliance. It is shown that such a transformation can only be understood when consumer motivations other than social recognition are taken into account. We depict norm emergence as a learning process based on changing associations between a specific consumption act and widely shared, non-subjectivist consumer needs. Our conjectures are illustrated by means of a case study: the emergence of the cleanliness norm in the 19th century.

accepted for publication in Metroeconomica

#0809 (PDF)
M. Barigozzi, L. Alessi, M. Capasso, G. Fagiolo
The Distribution of Consumption-Expenditure Budget Shares. Evidence from Italian Households: This paper explores the statistical properties of household consumption-expenditure budget shares distributions (HBSDs) – defined as the share of household total expenditure spent for purchasing a specific category of commodities – for a large sample of Italian households in the period 1989-2004. We find that HBSDs are fairly stable over time for each specific category, but profoundly heterogeneous across commodity categories. We then derive a parametric density that is able to satisfactorily characterize HBSDs and: (i) is consistent with the observed statistical properties of the underlying levels of household consumption-expenditure distributions; (ii) can accommodate the observed acrosscategory heterogeneity in HBSDs. Finally, we taxonomize commodity categories according to the estimated parameters of the proposed density. We show that the resulting classification is consistent with the traditional economic scheme that labels commodities as necessary, luxury or inferior.

#0808 (PDF)
A. Coad, J.P. Tamvada
The Growth and Decline of Small firms In Developing Countries: Empirical work on micro and small firms has focused on developed countries. The little work that exists on developing countries is all too often based on small samples taken from ad hoc questionnaires. The census data we analyze are fairly representative of the structure of small business in India. Consistent with prior research on developed countries, size and age have a negative impact on firm growth in the majority of specifications. The decision to export is a double-edged sword – if successful it can accelerate the growth of successful firms, but it can also increase the probability of decline. While proprietary ownership results in faster growth, enterprises managed by women are less likely to grow and more likely to decline. Although many small firms are able to convert knowhow into commercial success, we find that many others do not have any technical knowledge and some are unable to use it to their benefit.

#0807 (PDF)
A. Coad
Distance to Frontier and Appropriate Business Strategy: This paper is an empirical test of the hypothesis that the appropriateness of different business strategies is conditional on the firm's distance to the industry frontier. We use data on four 2-digit high-tech manufacturing industries in the US over the period 1972-1999, and apply semi-parametric quantile regressions to investigate the contribution of firm behavior to market value at various points of the conditional distribution of Tobin's q. Among our results, we observe that innovative activity, measured in terms of R&D expenditure or patents, has a strong positive association with market value at the upper quantiles (corresponding to the leader firms) whereas the innovative efforts of laggard firms are valued significantly less. Laggard firms, we suggest, should instead achieve productivity growth through efficient exploitation of existing technologies and imitation of industry leaders. Employment growth in leader firms is encouraged whereas growth of backward firms is not as well received on the stock market.

#0806 (PDF)
K. Safarzynska, J. van den Bergh
Evolutionary Modelling in Economics: A Survey of Methods and Building Blocks: In this paper we present an overview of methods and components of formal economic models employing evolutionary approaches. This compromises two levels: (1) techniques of evolutionary modelling, including multi-agent modelling, evolutionary algorithms and evolutionary game theory; (2) building blocks or components of formal models classified into core processes and features of evolutionary systems - diversity, innovation and selection - and additional elements, such as bounded rationality, diffusion, path dependency and lock-in, co-evolutionary dynamics, multilevel and group selection, and evolutionary growth. We focus our attention on the characteristics of models and techniques and their underlying assumptions.

published online first in Journal of Evolutionary Economics: DOI 10.1007/s00191-009-0153-9

#0805 (PDF)
J. Vromen
Ontological issues in evolutionary economics: The debate between Generalized Darwinism and the Continuity Hypothesis: Hodgson and Knudsen's Generalized Darwinism (GD) and the Continuity Hypothesis (CH) put forward by Witt are currently vying for hegemony in the ontology of evolutionary economics. GD and the CH allegedly advance rivaling Darwinian foundations for the development of full-fledged causal evolutionary economic theories. Yet upon closer inspection it is not clear that GD and the CH are mutually exclusive rivals. For one thing, GD and the CH address different sorts of issues. Whereas GD aims at identifying general features that evolutionary processes in different domains (notably the biological and economic domain) have in common, the CH takes as its starting point the causal relations that obtain between antecedent biological evolution and ongoing economic evolution. It seems the one does not exclude the other. This impression is strengthened by the fact that Hodgson endorses rather than opposes something similar to the CH. The paper argues that the critical issue in settling whether or not GD and the CH are mutually exclusive is how much substantive content is given to GD and the CH respectively. Pushed by the critique of Witt (and some of his Evolutionary Economics Group members, Cordes and Buenstorf) that GD has not fully shaken off features that are specific for the biological domain, Hodgson and Knudsen seem to take recourse to a version of GD that is so abstract and general that it is rendered virtually vacuous. As such GD can not contribute much to the development of a full-fledged domain-specific causal economic theory of processes of economic change. It seems the CH fares better in this respect. The CH does offer building blocks for evolutionary theories of consumption and of production. But the problem with the GD is that it is unclear what constructive role (if any) Darwinian evolutionary theory has played in specifying the building blocks. The paper concludes with suggesting two other ways in which Darwinian evolutionary theory might be useful for studying economic evolution.

#0804 (PDF)
S. Bhaduri, H. Worch
Past Experience, Cognitive Frames, and Entrepreneurship: Some Econometric Evidence from the Indian Pharmaceutical Industry: The theoretical literature identifies three important entrepreneurial dimensions, namely discovering new opportunities, responsiveness to uncertainty, and coordination of a firm. In the empirical literature, past experience has been identified as having an important influence on organizational behavior. This literature, however, focuses predominantly on the impact of experience on new opportunities using a resource-based view and human capital perspective. In contrast, we draw upon the cognitive science literature to argue that past experience shapes an entrepreneur's cognitive frame, and, hence, influences entrepreneurship in a more holistic manner. We provide econometric evidence of the impact of past experience on all three entrepreneurial dimensions from the small scale Indian pharmaceutical enterprises.

#0803
U. Witt, C. Schubert
Constitutional Interests in the Face of Innovations: How Much Do We Need to Know about Risk Preferences?: In constitutional political economy, the citizens' constitutional interests determine the social contract that is binding for the post-constitutional market game. However, following traditional preference subjectivism, it is left open what the constitutional interest are. Using the example of risk attitudes, we argue that this approach is too parsimonious with regard to the behavioral foundations to support a calculus of consent. In face of innovative activities with pecuniary and technological externalities in the post-constitutional phase, the citizens' constitutional interests vary with their risk preferences. To determine what kind of social contract is generally agreeable, specific assumptions about risk preferences are needed.; published in: Constitutional Political Economy 19, 2008, 203-225.

#0802 (PDF)
A. Chai, A. Moneta
At the Origins of Engel Curves Estimation: This paper revisits Ernst Engel's (1857) original article in which he systematically investigated the relationship between consumption expenditure and income. While he is mainly remembered today for the discovery of Engel's law, we highlight how Engel addressed in a particular way the issue of the relation between statistical empirical analysis and economic theorizing. Inspired by an inductive methodology, Engel's method to inferempirical regularities made no a priori assumption on the estimated functional form and anticipates many aspects of current non-parametric regression methods. Furthermore, Engel devised a quasi-behavioral theory of consumption centered on the concept of wants to justify and explain his empirical results which he used to asses population living standards. Although incomplete, Engel's consumption theory tackles a much neglected issue in consumption theory: what accounts for the manner in which consumption patterns change as income rises.

#0801 (PDF)
J. Dormann, T. Ehrmann, M. Kopel
Managing the Evolution of Cooperation: Management scholars have long stressed the importance of evolutionary processses for inter-firm cooperation but have mostly missed the promising opportunity to incorporate ideas from evolutionary theories into the analysis of collaborative arrangements. In this paper, we first present three rules for the evolution of cooperation - kinship selection, direct reciprocity, and indirect reciprocity. Second, we apply our theoretical considerations, enriched with ideas from cultural anthropology, to the context of a specific and particularly attractive type of cooperative arrangement, the franchise form of organization. Third, we provide a preliminary empirical test with regards to conditions under which evolutionary modes can secure cooperative behavior. We conclude by summarizing our results and deriving fertile areas for further research.

Papers 2007 Top

#0724 (PDF)
R. Joosten
Patience, Fish Wars, rarity value & Allee effects.: In a Small Fish War two agents interacting on a body of water have essentially two options: they can fish with restraint or without. Fishing with restraint is not harmful; shing without yields a higher immediate catch, but may induce lower future catches. Inspired by recent work in biology, we introduce into this setting rarity value and Allee effects. Rarity value means that extreme scarcity of the sh may affect its unit profit 'explosively'. An Allee effect implies that if the population size or density falls below a so-called Allee threshold, then only negative growth rates can occur from then on. We examine equilibrium behavior of the agents under the limiting average reward criterion and the sustainability of the common-pool resource system. Assuming fixed prices at first, we show that patience on the part of the agents is beneficial to both sustainable high catches and fish stocks. An Allee effect can not influence the set of equilibrium rewards unless the Allee threshold is (unrealistically) high. A price mechanism reflecting effects of the resource's scarcity, is then imposed. We obtain a rather subtle picture of what may occur. Patience may be detrimental to the sustainability of a high fish stock and it may be compatible with equilibrium behavior to exhaust the resource almost completely. However, this result does not hold in general but it depends on complex relations between the Allee threshold, the dynamics in the (interactive) resource and price systems, and the actual scarcity caused if the agents show no restraint.

#0723 (PDF)
T. Brenner, A. Mühlig
Factors and Mechanisms Causing the Emergence of Local Industrial Clusters - A Meta-Study of 159 Cases.: Local industrial clusters have attracted much attention in the recent economic and geographical literature. A huge number of case studies have been conducted. This paper presents a meta-analysis of the case studies of 159 local industrial clusters in various countries and industries. Based on an overview of the various theories and arguments about the emergence of such clusters in the literature, it analyses the involvement of 35 different local conditions and processes, providing a summary on the knowledge that is gathered in these case studies with a comparison between continents, new and old clusters, and high- and low-tech industries.

#0722 (PDF)
C. Cordes
Emergent Cultural Phenomena and their Cognitive Foundations: To explain emergent cultural phenomena, this paper argues, it is inevitable to understand the evolution of complex human cognitive adaptations and their links to the population-level dynamics of cultural variation. On the one hand, the process of cultural transmission is influenced and constrained by humans' evolved psychology; people tend to acquire some cultural variants rather than others. On the other hand, the cultural environment provides cultural variants that are transmitted to or adopted by individuals via processes of social learning. To gain insights into this recursive relationship between individual cognitive dispositions at the micro level and cultural phenomena at the macro level, the theory of gene-culture coevolution is applied. Moreover, a model of cultural evolution demonstrates the dissemination of novelty within a population via biased social learning processes. As a result, some unique facets of human behavior and cumulative cultural evolution are identified.

#0721 (PDF)
J. Henrich
The evolution of costly displays, cooperation, and religion. Inferentially potent displays and their implications for cultural evolution: This paper lays out an evolutionary theory for the cognitive foundations and cultural emergence of the extravagant displays (e.g., ritual mutilation, animal sacrifice, and martyrdom) that have so often tantalized social scientists, as well as more mundane actions that influence cultural learning and historical processes. In Part I, I use the logic of natural selection to build a theory for how and why seemingly costly displays influence the cognitive processes associated with cultural learning—why do "actions speak louder than words." The core idea is that cultural learners can avoid being manipulated by their potential models (those they are inclined to learn from) if they are biased toward models whose actions/displays would seem costly to the model if he held beliefs different from those he expresses verbally. I call these actions inferentially potent displays. Predictions are tested with experimental work from psychology. In Part II, I examine the implications for cultural evolution of this evolved bias in human cultural learning. The formal analytical model shows that this learning bias creates evolutionarily stable sets of interlocking beliefs and individually-costly practices. Part III explores how cultural evolution, driven by competition among groups or institutions stabilized at alternative sets of these interlocking belief-practice combinations, has led to the association of costly acts, often in the form of rituals, with deeper commitments to group beneficial ideologies, higher levels of cooperation within groups, and greater success in competition with other groups or institutions. Predictions are explored with existing cross-cultural, ethnographic, ethnohistorical and sociological data. I close by briefly sketching some further implications of these ideas for the study of religion and ritual.

#0720 (PDF)
J. Henrich, R. Boyd
Division of Labor, Economic Specialization and the Evolution of Social Stratification: This paper presents a simple mathematical model that shows how economic inequality between social groups can arise and be maintained even when the only adaptive learning processes driving cultural evolution increases individual's economic gains. The key assumption is that human populations are structured into groups, and that cultural learning is more likely to occur within groups than between groups. Then, if groups are sufficiently isolated and there are potential gains from specialization and exchange, stable stratification can sometimes result. This model predicts that stratification is favored, ceteris paribus, by (1) greater surplus production, (2) more equitable divisions of the surplus among specialists, (3) greater cultural isolation among subpopulations within a society, and (4) more weight given to economic success by cultural learners. We also analyze how competition among societies, both egalitarian societies and those with differing degrees of stratification, influences the long-run evolution of the institutional forms that support social stratification. In our discussion, we illustrate the model using two ethnographic cases, explore the relationships between our model and other existing approaches to social stratification within anthropology, and compare our model to the emergence of heritable divisions of labor in other species.

#0719
U. Witt, C. Zellner
How Firm Organizations Adapt to Secure a Sustained Knowledge Transfer: New knowledge with potential commercial value is created, replicated, and transferred in a distributed manner. The highly systemic nature of knowledge production and the need for any knowledge to be individually acquired and expressed in order to produce an effect, jointly constrain the dynamics of knowledge commercialization. This paper analyzes the nature of these constraints from an individualistic perspective, focusing particularly on the often neglected entrepreneurial aspects of the knowledge transfer. It explains how the constraints are overcome by organizational adaptations inside firms so that a sustained knowledge transfer into the commercial sphere of the innovation system can be secured.; published in: Economics of Innovation and New Technology, Vol. 18, No. 7, 2009, 647 - 661.

#0718 (PDF)
G. Buenstorf
Opportunity Spin-offs and Necessity Spin-offs: Necessity spin-offs are organized by employees of incumbent firms to escape deteriorating job conditions. This paper proposes a conceptual model of the spin-off process. Necessity spin-offs are distinguished from opportunity spin-offs on the basis of their triggering events. An empirical analysis of German laser spin-offs traces differences in the performance and determinants of the two types of spin-offs. Necessity spin-offs are important to limit the devaluation of individual competences by the market process. They are particularly relevant in growth crises of innovative firms, and in the restructuring of economies with protected or state-owned companies.

#0717 (PDF)
A. Lorentz, M. Savona
Evolutionary Micro-dynamics and Changes in the Economic Structure: The paper aims to account for the empirical stylised facts related to changes in sectoral structures that have led to the growth of services in most advanced countries over recent decades. A growth model with evolutionary micro-founded structural change is developed, which formalises the role of technical change and changes in intermediate demand as they affect the evolution of the sectoral composition of the economy and macro-economic growth. Firstly, we provide a micro-foundation for the Kaldorian Cumulative Causation mechanism. Secondly, we account for (demand-related) macro-constraints affecting the micro-behaviour of firms in the decision to adopt technology. We also formalise the mechanisms transmitting the effects of micro-behaviour on aggregate growth, via changes in the intermediate linkages and sectoral composition of the economy. The simulated results are based on the use of the actual data, including Input-Output (I-O) coefficients in the case of Germany. Three scenarios are identified, which account for the effects of a set of key parameters on changes in the structure of the economy.

#0716 (PDF)
G. M. Hodgson, T. Knudsen
From Group Selection to Organizational Interactors: This paper builds on previous work within the conceptual framework of a generalized Darwinism that clarifies such concepts as selection and replication. One of its aims is to refine the concept of the interactor. An overview of the conditions under which group selection may occur helps us identify factors such as structural coherence that are useful in defining the interactor. This in turn leads to the question of selection on multiple levels. An additional level of replication emerges when we consider routines within organizations and the social positions related to them. The analysis here establishes that social organizations including business firms are often interactors. Such organizations are more than simply groups because of the existence of routines and social positions. Accordingly, to understand firms and other organizations, we need more that a "dual inheritance" theory; we have to consider the replication of social positions and routines as well.

#0715 (PDF)
A. Coad
Disentangling the firm growth process: evidence from a recursive panel VAR.: We attempt to describe the coevolution of employment growth, sales growth and growth of profits in a panel of French manufacturing firms 1996-2004. Our analysis entails 'recursive' panel vector autoregressions, whereby we impose the structure of employment growth leading to contemporaneous sales growth, which in turn is associated with contemporaneous growth of profits. We observe that whilst employment growth has a direct negative association with profit growth, there are indirect effects through which employment growth leads to sales growth which in turn has a large effect on profits growth. The net effect of employment growth is thus positive growth of profits. Counter to some 'replicator dynamics' theories of industrial development, profit growth is not followed by much subsequent growth of employment.

#0714 (PDF)
R. Wenting, K. Frenken
Firm Entry and Institutional Lock-in: An Organizational Ecology Analysis of the Global Fashion Design Industry.: Few industries are more concentrated than the global fashion industry. We analyse the geography and evolution of the ready-to-wear fashion design industry by looking at the yearly entry rates following an organizational ecology approach. In contrast to earlier studies on manufacturing industries, we find that legitimation effects are local and competition effects are global. This result points to the rapid turnover of ideas in fashion on the one hand and the global demand for fashion apparel on the other hand. We attribute the decline of Paris in the post-war period to 'institutional lock-in', which prevented a ready-to-wear cluster to emerge as vested interested of haute couture designers were threatened. An extended organizational ecology model provides empirical support for this claim.

#0713 (PDF)
C. Cordes
The Role of Biology and Culture in Veblenian Consumption Dynamics.: This paper incorporates aspects of humans' evolved cognition into a formal model of cultural evolution and scrutinizes their interactions with population-level processes. It is shown how the biased transmission of different kinds of behavior via cultural learning processes influences agents' consumption behavior. Thereby, the model's learning dynamics are capable of generating typical Veblenian consumption dynamics. Based on these insights, the paper then scrutinizes on the role of humans' biological heritage and Darwinian concepts in the development of economic theories in general. Moreover, the relation of the ontological basis of biological and cultural evolution is addressed.

#0712
U. Witt, T. Brenner
Output Dynamics, Flow Equilibria and Structural Change – A Prolegomenon to Evolutionary Macroeconomics: In an evolutionary approach to macroeconomics, the market disequilibrium dynamics resulting from structural change need to be properly represented at the aggregate level. As suggested by the late F.A.Hayek, a suitable equilibrium concept required to this end as a frame of reference, is that of a flow equilibrium. The paper explores the corresponding flow dynamics that draw attention to variables not usually considered in macroeconomic theorizing. Using statistical estimates for these new variables for the West German manufacturing sector during the German unification process allows some important new insights on the relationships between structural change and macroeconomic performance.; published in: Journal of Evolutionary Economics, Vol. 18 (2), 2008, 249-260

#0711 (PDF)
J. Vromen
Generalized Darwinism in Evolutionary Economics: The Devil is in the Details: Hodgson and Knudsen want their version of Generalized Darwinism to meet two /desiderata. /First, their formulation of Darwinism should be sufficiently general and abstract, so that it only refers to general, domain-unspecific features that processes of biological and of socio-cultural evolution have in common with each other. Their formulation should leave out features of Darwinism that are specific to the biological domain only. Second, their version should be able to guide the development of theories that can causally explain processes of economic evolution. Hodgson and Knudsen argue that the latter – going from their abstract and general formulation of Darwinism to such full-fledged economic theories – is a matter of adding details that are specific to the economic domain. Both desiderata seem reasonable. Yet they pull in opposite directions. It is argued that in order to meet the first desideratum the formulation of Darwinism should be so general and abstract that it is bereft of any substance and content and, as such, of little use in guiding further theory development. If going from such a formulation to a full-fledged economic theory is called a matter of adding details, the devil surely is in the details.

#0710 (PDF)
A. Coad, R. Rao
Firm Growth and R&D Expenditure: We apply a panel vector autoregression model to a firm-level longitudinal database to observe the co-evolution of sales growth, employment growth, profits growth and growth of R&D expenditure. Contrary to expectations, profit growth seems to have little detectable effect on R&D investment. Instead, firms appear to increase their total R&D expenditure following growth in sales and growth of employment. In a sense, firms behave 'as if' they aim for a roughly constant ratio of R&D to employment (or sales). We observe heterogeneous effects for growing or shrinking firms however, suggesting that firms are less willing to reduce their R&D levels following a negative growth shock than they are willing to increase R&D after a positive shock.

#0709 (PDF)
C. Antonelli
Localized Technological Knowledge: Pecuniary Knowledge Externalities And Appropriability: Recent advances in the economics of knowledge highlight the key role of pecuniary knowledge externalities in explaining the system dynamics of total factor productivity growth. When non-exhaustible technological knowledge is an input both in the production of new goods and of further knowledge, and the acquisition of external knowledge, as a non-disposable input in the production of new knowledge, is not free, pecuniary externalities, as opposed to technological externalities, provide an important clue to understanding the key role of knowledge governance mechanisms in assessing the rate of growth of total factor productivity and economic systems at large. The negative effects upon appropriability limit the advantages of agglomeration.

#0708 (PDF)
M. Qizilbash
The Adaptation Problem, Evolution and Normative Economics: Amartya Sen has advanced a number of distinct arguments against utilitarianism and 'utility'-based views more generally. One of these invokes various ways in which underdogs can 'adapt' and learn to live with their situations. Sen's argument is related to Jon Elster's discussion of 'adaptive preferences' but is distinct in part because Sen cites the need for underdogs to survive. When read in combination with his discussion of Darwinism, Sen's discussion of adaptation is relevant to recent work in normative economics which is influenced by evolutionary biology. It poses a problem for Richard Layard's book on happiness, particularly its policy conclusions. It also poses a problem for Ken Binmore's account of justice because the empathetic preferences in terms of which interpersonal comparisons are made in Binmore's account are formed through social evolution.

#0707 (PDF)
U. Witt
Novelty and the Bounds of Unknowledge in Economics: The emergence of novelty is a driving agent for economic change. New technologies, new products and services, new institutional arrangements, to mention a few examples, are the backbone of development and growth. Important though it is, the emergence of novelty is not well understood. What seems to be clear, however, is that it implies "bounds of unknowledge" (Shackle) that impose epistemological and methodological constraints on economic theorizing. In this paper, the problems will be examined, possibilities for positively theorizing about novelty will be explored, and the methodological consequences for causal explanations and the modeling of economics dynamics will be discussed.

#0706 (PDF)
G. Buenstorf, C. Cordes
Can Sustainable Consumption Be Learned?: This paper shows how sustainable consumption patterns can spread within a population via processes of social learning even though a strong individual learning bias may favor environmentally harmful products. We present a model depicting how the biased transmission of different behaviors via individual and social learning influences agents' consumption behavior. The underlying learning biases can be traced back to evolved cognitive dispositions. Challenging the vision of a permanent transition toward sustainability, we argue that "green" consumption patterns are not self-reinforcing and cannot be "locked in" permanently.

#0705 (PDF)
A. Coad, R. Rao
The Employment Effects of Innovations in High-Tech Industries: The issue of technological unemployment receives perennial popular attention. Although there are previous empirical investigations that have focused on the relationship between innovation and employment, the originality of our approach lies in our choice of method. We focus on four 2-digit manufacturing industries that are known for their high patenting activity. We then use Principal Components Analysis to generate a firm- and year-specific 'innovativeness' index by extracting the common variance in a firm's patenting and R&D expenditure histories. To begin with, we explore the heterogeneity of firms by using semi-parametric quantile regression. Whilst some firms may reduce employment levels after innovating, others increase employment. We then move on to a weighted least squares (WLS) analysis, which explicitly takes into account the different job-creating potential of firms of different sizes. As a result, we focus on the effect of innovation on total number of jobs, whereas previous studies have focused on the effect of innovation on firm behavior. Indeed, previous studies have typically taken the firm as the unit of analysis, implicitly weighting each firm equally according to the principle of 'one firm equals one observation'. Our results suggest that firm-level innovative activity leads to employment creation that may have been underestimated in previous studies.

#0704 (PDF)
S.E.G. Lea, L.Newson
Prospects for an evolutionary economic psychology: Buying and consumption as a test case: Until a few generations ago, humans made their living by foraging, like other animals. We have therefore inherited genes that allowed our ancestors to thrive as hunters and gatherers. Thriving in a modern economy requires very different behaviours but we cope because the human brain evolved to be flexible with the ability to form cooperative networks with other humans and to maintain the shared body of information, expertise and values which we call "culture". We argue that human economic behaviour is influenced by both the genes and the culture that we "inherit" and that both are a result of a Darwinian evolutionary process. An evolutionary approach is therefore likely to be of value in developing theories of economic behaviour. We then use this approach to analyse in broad terms how people that are born with the brains of foragers living in a small-scale society become consumers in a modern society and where this behaviour is likely to lead our species.

#0703 (PDF)
A. Coad
Firm Growth: A Survey: We survey the phenomenon of the growth of firms drawing on literature from economics, management, and sociology. We begin with a review of empirical 'stylised facts' before discussing theoretical contributions. Firm growth is characterized by a predominant stochastic element, making it difficult to predict. Indeed, previous empirical research into the determinants of firm growth has had a limited success. We also observe that theoretical propositions concerning the growth of firms are often amiss. We conclude that progress in this area requires solid empirical work, perhaps making use of novel statistical techniques.

#0702
R. Joosten
Strategic Advertisement with Externalities: A New Dynamic Approach: We model and analyze strategic interaction over time in a duopolis-tic market. Each period the firms independently and simultaneously choose whether to advertise or not. Advertising increases the own immediate sales, but may also cause an externality, e.g., increase or decrease the immediate sales of the other firm ceteris paribus. There exists also an effect of past advertisement efforts on current sales. The 'market potential' of each firm is determined by its own but also by its opponent's past efforts. A higher effort of either firm leads to an increase of the market potential, however the impact of the own past efforts is always stronger than the impact of the opponent's past efforts. How much of the market potential materializes as immediate sales, then depends on the current advertisement decisions. We determine feasible rewards and (subgame perfect) equilibria for the limiting average reward criterion using methods inspired by the repeated-games literature. Uniqueness of equilibrium is by no means guaranteed, but Pareto efficiency may serve very well as a refinement criterion for wide ranges of the advertisement costs.; published in: Modeling, Computation and Optimization (S.K. Neogy, A.K. Das & R.B. Bapat, eds.), Vol. 6 of the ISI Platinum Jubilee Series, World Scientific Publishing Company, Singapore, ISBN 978-9-8142-7350-3, pp. 21-43, 2009

#0701
U. Witt
Heuristic Twists and Ontological Creeds - Road Map for Evolutionary Economics: What is special about the evolutionary approach? This question is given quite different, and partly incommensurable, answers in evolutionary economics. The present paper shows how the different answers correspond with, on the one hand, the particular heuristic twists by which the corresponding authors arrive at their hypotheses (e.g. by borrowing analogies from evolutionary biology). On the other hand, the answers hinge on different ontological assumption (i.e. on whether or not evolution in nature and in the economy are viewed as belonging to the same sphere of reality and, hence, as mutually dependent processes). By distinguishing these two dimensions a road map for evolutionary economics is drawn up that helps to better understand where, and why, the competing interpretations differ. In order to assess their achievements and their potential for future research, some results of an opinion poll among evolutionary economists are presented and discussed.; published in: Hanappi, H. and Elsner, W. (eds.) Advances in Evolutionary Institutional Economics: Evolutionary Mechanisms, Non-Knowledge and Strategy, Cheltenham: Edward Elgar, 2008, pp. 9-34.

Papers 2006 Top

#0624
S. T. Silva, A.C. Teixeira
On the divergence of research paths in evolutionary economics: a comprehensive bibliometric account: In the last two decades there has been a noticeable increase in published research in evolutionary economics. The idea that formal modelling is a sine qua non condition for establishing a rigours and coherence scientific frame, has led to an over concern with formalization issues among evolutionary researchers. The general perception is that formalization lags behind the appreciative work. Notwithstanding, this general reading has not yet been supported by real data analysis. This work presents a comprehensive survey on evolutionary economics, intending at exploring the main research paths and contributions of this theorizing framework using bibliometric methods. This documentation effort is based on an extensive review of the abstracts from articles published in all economic journals gathered from the Econlit database over the past fifty years. Evolutionary contributions apparently have not converged to an integrated approach. In the present paper, we document the more important paths emergent in this field. Before 1990, the importance of published evolutionary related research is almost negligible - more than 90% of total papers were published after that date. Our results further show two rather extreme main research strands: 'History of Economic Thought and Methodology' and 'Games'. Moreover, formal approaches have a reasonable and increasing share of published papers between 1969 and 2005. In contrast, purely empirical-related works are relatively scarce, involving a meagre and stagnant percentage of published works. This recalls for a need to redirect the evolutionary research agenda.; published as: "On the divergence of evolutionary research paths in the past 50 years: a comprehensive bibliometric account" in: Journal of Evolutionary Economics. Vol. 19 (5), 2009, 605-642.

#0623 (PDF)
G. Buenstorf
Comparative Industrial Evolution and the Quest for an Evolutionary Theory of Market Dynamics: The paper makes the case for an empirically grounded, "bottom-up" approach to theory building in evolutionary industrial economics. This approach is based on studying systematically selected industries that are comparable in key dimensions. It opens up opportunities for testing the relevance, preconditions, and generality of explanatory factors in industry evolution. An illustration of the approach is subsequently given by presenting some findings on the evolution of the historical U.S. farm tractor industry.

#0622 (PDF)
E. Khalil
Charles Darwin meets Amoeba economicus: Why Natural Selection Cannot Explain Rationality.: Advocates of natural selection usually regard rationality as redundant, i.e., as a mere linguistic device to describe natural selection. But this "Redundancy Thesis" faces the anomaly that rationality differs from natural selection. One solution is to conceive rationality as a trait selected by the neo-Darwinian mechanism of natural selection as . But this "Rationality-qua-Trait Thesis" faces a problem as well: Following neo-Darwinism, one cannot classify one allele of, e.g., eyesight as better than another without reference to constraints while one can classify rationality as better than irrationality irrespective of constraints. Therefore, natural selection cannot be a trait. This leads us to the only solution: Rationality is actually a method that cannot be reduced to a trait. This "Rationality-qua-Method Thesis" lays the ground for alternative, developmental views of evolution.

#0621
V. Vanberg
Rationality, Rule-Following and Emotions: On the Economics of Moral Preferences: The long-standing critique of the 'economic model of man' has gained new impetus not least due to the broadening research in behavioral and experimental economics. Many of the critics have focused on the apparent difficulty of traditional rational choice theory to account for the role of moral or ethical concerns in human conduct, and a number of authors have suggested modifications in the standard model in response to such critique. This paper takes issue with a quite commonly adopted 'revisionist' strategy, namely seeking to account for moral concerns by including them as additional preferences in an agent's utility function. It is argued that this strategy ignores the critical difference between preferences over outcomes and preferences over actions, and that it fails to recognize that 'moral preferences' belong into the second category. Preferences over actions, however, cannot be consistently accounted for within a theoretical framework that focuses on the rationality of single actions. They require a shift of perspective, from a theory of rational choice to a theory of rule-following behavior.; published as: "On the economics of moral preferences" in: The American Journal of Economics and Sociology, Oct, 2008

#0620
G. Buenstorf, D. Fornahl
B2C - Bubble to Cluster: The Dot.com Boom, Spin-off Entrepreneurship, and Regional Industry Evolution: This article studies entrepreneurial activities emerging out of one of Germany's most prominent dot.com firms: Intershop, a maker of e-commerce software. We show that Intershop spawned at least 30 spin-offs. The majority entered locally, giving rise to a small but growing software cluster and counteracting the job losses accompanying the parent firm's drastic downsizing after 2000. We trace the knowledge transfer from Intershop to the spin-offs and relate it to recent theorizing on the spin-off process as well as spin-off-based cluster formation. The Intershop case suggests that temporarily successful dot.coms could exert lasting effects on regional development.; published as: 'B2C - bubble to cluster: the dot-com boom, spin-off entrepreneurship, and regional agglomeration', in: Journal of Evolutionary Economics, Vol. 19 (3), 2009, 349-378.

#0619 (PDF)
F. Malerba, R. Nelson, L. Orsenigo, S. Winter
Vertical Integration and Dis-integration of Computer Firms - A History Friendly Model of the Co-evolution of the Computer and Semiconductor Industries: In this paper we present a history-friendly model of the changing vertical scope of computer firms during the evolution of the computer and semiconductor industries. The model is "history friendly", in that it attempts at replicating some basic, stylized qualitative features of the evolution of vertical integration on the basis of the causal mechanisms and processes which we believe can explain the history. The specific question addressed in the model is set in the context of dynamic and uncertain technological and market environments, characterized by periods of technological revolutions punctuating periods of relative technological stability and smooth technical progress. The model illustrates how the patterns of vertical integration and specialization in the computer industry change as a function of the evolving levels and distribution of firms' capabilities over time and how they depend on the co-evolution of the upstream and downstream sectors. Specific conditions in each of these markets - the size of the external market, the magnitude of the technological discontinuities, the lock-in effects in demand - exert critical effects and feedbacks on market structure and on the vertical scope of firms as time goes by.

#0618 (PDF)
C. Cordes, P. Richerson, R. McElreath, P. Strimling
How Does Opportunistic Behavior Influence Firm Size?: This paper relates firm size and opportunism by showing that, given certain behavioral dispositions of humans, the size of a profit-maximizing firm can be determined by cognitive aspects underlying firm-internal cultural transmission processes. We argue that what firms do better than markets - besides economizing on transaction costs - is to establish a cooperative regime among its employees that keeps in check opportunism. A model depicts the outstanding role of the entrepreneur or business leader in firm-internal socialization processes and the evolution of corporate cultures. We show that high opportunism-related costs are a reason for keeping firms' size small.

#0617 (PDF)
G. Buenstorf
Is Academic Entrepreneurship Good or Bad for Science? Empirical Evidence from the Max Planck Society: Based on new data, this paper studies invention disclosure, licensing, and firm formation activities of Max Planck Institute directors over the time period 1985-2004, and analyzes their effects on scientists' publication and citation records. The results are consistent with prior findings that inventing does not adversely affect research output. More mixed results are obtained with regard to academic entrepreneurship. The analysis raises questions vis-à-vis earlier explanations for positive relationships between inventing and publishing. It finds little evidence than inventors learn from interacting with firms. Likewise, license revenues do not enable scientists to step up their research activities.

#0616 (PDF)
D. Ross
Moral fictionalism, preference moralization and anti-conservatism: why metaethical error theory doesn't imply policy quietism: The evolutionary explanation of human dispositions to prosocial behaviour and to moralization of such behaviour undermines the moral realist's belief in objective moral facts that hold independently of people's contingent desires. At the same time, advocacy of preferences for significant departures from hallowed policies (that is, for 'loud policies') is generally sure to be ineffective unless it is moralized. It may seem that this requires the economist who would advocate loud policies, but is also committed to a naturalistic account of human social and cognitive behaviour, to engage in wilful manipulation, morally hectoring people even when she knows that her doing so ought rationally to carry no persuasive force. Furthermore, it might be wondered on what basis just for herself an error theorist about morality advocates loud policies. I argue that understanding the role of moralized preferences in the maintenance of the self, and in turn understanding the economic rationale of such self-maintenance, allows us to see how and why preferences can be moralized by a believer in error theory without this implying hypocrisy or manipulation of others.

#0615 (PDF)
D. Mueller
Democracy, Rationality and Morality: The fundamental, underlying assumption in economics, public choice, and increasingly in political science and other branches of the social sciences is that individuals are rational actors. Many people have questioned the realism of this assumption, however, and considerable experimental evidence seems to refute it. This paper builds on recent findings from the field of evolutionary psychology to discuss the evolution of rational behavior in humans. It then goes on to relate this evolutionary process to the evolution of political institutions and in particular of democratic institutions.

#0614 (PDF)
K Binmore
The Origins of Fair Play: This paper gives a brief overview of an evolutionary theory of fairness. The ideas are fleshed out in Binmore's book 'Natural Justice' (Oxford University Press, New York, 2005.), which is itself a condensed version of his earlier two-volume book 'Game Theory and the Social Contract' (MIT Press, Cambridge, MA, 1994 and 1998).

#0613
U. Witt
Evolutionary Economics and Psychology: Evolutionary economics is a paradigm for explaining the transformation of the economy. To achieve its goal, it needs being founded on a proper theory of economic behavior. The paper discusses these foundations. It is argued that the historical malleability of economic behavior is based on the interactions between innate behavior dispositions and adaptation mechanisms on the one hand and the limited, and always selective, cognitive and observational learning that contributes to an ever more extended and differentiated action knowledge. The implications of this interpretation are outlined in an exemplary fashion for the case of the evolution and growth of consumption.; published in: Lewis, A. (ed) The Cambridge Handbook of Psychology and Economic Behaviour, Cambridge: Cambridge University Press, 2008, pp. 493-511.

#0612
T. Broekel, M. Binder
The Regional Dimension of Knowledge Transfers - A Behavioral Approach: Innovations are inherently connected to knowledge transfers. The need of face-to-face contacts to transfer tacit knowledge is commonly argued to cause a regional dimension of innovative activities. The paper presents an alternative explanation based on a model of boundedly rational actors who search for knowledge. It is shown that a regional dimension exists in these processes that results from a regional bias in an actor's search activities. Social embeddedness, a shared regional identity and limited spatial mobility foster this bias. We argue that insights from research on these topics can help to define the geographic size of a region.; published in: Industry & Innovation, Vol. 14(2), 2007, 151 - 175.

#0611 (PDF)
C. Werker
An Assessment of the Regional Innovation Policy by the European Union based on Bibliometrical Analysis: The Lisbon strategy for growth and jobs seeks to use knowledge and innovation in the context of the European Research Area (ERA). To build the ERA the European Union (EU) implements – amongst others - regional innovation policy. Ample scientific publications have investigated how innovation drives regional dynamics. Therefore, we assess the goals of European regional innovation policy in the light of the scientific findings, which we collected and condensed by bibliometrical analysis. The general goals of the Lisbon strategy to at the same time stimulate growth and achieve cohesion of economic activities across the EU is not in line with the finding that positive cumulative and self-reinforcing processes go hand in hand with the agglomeration of economic activities. However, the goals of the specific innovation policies for the regional level are mainly in line with the scientific findings.

#0610 (PDF)
K. Dopfer
The Origins of Meso Economics. Schumpeter's Legacy: The paper unravels the subversive nature of Schumpeter's proposition that entrepreneurs carry out innovations (the micro level), that swarms of followers imitate them (meso) and that, as a consequence, 'creative destruction' leads to economic development 'from within' (macro). It is argued that Schumpeter paved the way for a new micro–meso–macro framework in economics. Centre stage is meso. Its essential characteristic is bimodality, meaning that one idea (the generic rule) can be physically actualised by many agents (a population). Ideas can relate to others, and, in this way, meso constitutes a structure component of a 'deep' invisible macro structure. Equally, the rule actualisation process unfolds over time – modelled in the paper as a meso trajectory with three phases of rule origination, selective adoption and retention – and here meso represents a process component of a visible 'surface' structure. The universal macro measure with a view to the appropriateness of meso components is generic correspondence. At the level of ideas, its measure is order; at that of actual relative adoption frequencies, it is generic equilibrium. Economic development occurs at the deep level as transition from one generic rule to another, inducing a change of order, and at the surface level as the new rule is adopted, destroying an old equilibrium and establishing a new one. The final third of the paper discusses a few of the rich set of major contributions to the Neo-Schumpeterian – micro-meso-macro - programme

#0609 (PDF)
R. Koppl
Democratic Epistemics: An Experiment on How to Improve Forensic Science: In "monopoly epistemics," one privileged actor is asked to identify the truth. In "democratic epistemics," several independent parties are asked. In an experiment contrasting them, democratic epistemics reduced the systemic error rate by two-thirds, supporting the claim that replacing monopoly epistemics with democratic epistemics would reduce error rates in forensic science and other areas. It also suggests first, the potential of "epistemic systems design," which employs the techniques of economic systems design to address issues of veracity, rather than efficiency, and second, the value of "experimental epistemology," which employs experimental techniques in the study of science. Research of the sort described here puts evolutionary epistemology into practice by seeking to find the proper design principles for error-correcting social institutions.

#0608
T. Brenner, A. Gildner
Long-term Implications of Local Industrial Clusters: Local industrial clusters have attracted much attention in recent economic
and geographic literature. The focus has been on identifying the conditions for the emergence of such clusters. Here the long-term implications of local industrial clusters are studied. To this end, we examine German regions where those that contain long-existing industrial clusters are compared to all other regions. We statistically examine what characterises regions that have contained local industrial clusters for quite some time. The analysis is conducted separately for three industries.; published in: European Planning Studies, Vol. 14, No. 9, October 2006, 1315-1328

#0607 (PDF)
M. Binder, U. Niederle
Institutions as Determinants of Preference Change – A One Way Relation?: In recent economic literature, there has been an increasing interest in modelling preferences as endogenous. Some arguments go along the lines that institutions shape preferences. This paper suggests that adopting a more substantive concept of preferences furthers our understanding of how they systematically shape institutions. We integrate social-psychological concepts and combine them with an account of learning. Thus, a model of the dynamic interrelation between preferences and institutions can be developed. While institutional change can certainly be partly explained in terms of changing incentives, we offer an approach that goes beyond the standard explanation.

#0606
C. Cordes, P. J. Richerson, R. McElreath, P. Strimling
A Naturalistic Approach to the Theory of the Firm: The Role of Cooperation and Cultural Evolution: One reason why firms exist, this paper argues, is because they are suitable organizations within which cooperative production systems based on human social predispositions can evolve. In addition, we show how an entrepreneur – given these predispositions – can shape human behavior within a firm. To illustrate these processes, we will present a model that depicts how the biased transmission of cultural contents via social learning processes within the firm influence employees' behavior and the performance of the firm. These biases can be traced back to evolved social predispositions. Humans lived in tribal scale social systems based on significant amounts of intra- and even intergroup cooperation for tens if not a few hundred thousand years before the first complex societies arose. Firms rest upon the social psychology originally evolved for tribal life. We also relate our conclusions to empirical evidence on the performance and size of different kinds of organizations. Modern organizations have functions rather different from ancient tribes, leading to friction between our social predispositions and organization goals. Firms that manage to reduce this friction will tend to function better.; published in: Journal of Economic Behavior & Organization, Vol. 68 (1), 2008, 125 - 139.

#0605
U. Witt
Evolutionary Economics: This article reviews the way of thinking about economic problems and the research agenda associated with the evolutionary approach to economics. This approach generally focuses on the processes that transform the economy from within and on their consequences for firms and industries, production, trade, employment and growth. The article highlights the major contributions to evolutionary economics and explains its key concepts together with some of their implications.; published in: The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 20 May 2008. <http://www.dictionaryofeconomics.com/article?id=pde2008_E000295> doi:10.1057/9780230226203.0511

#0604
A. Frenzel Baudisch
Consumer heterogeneity evolving from social group dynamics. Latent class analyses of German footwear consumption 1980-1991: Boundedly rational consumers rely on their social environment as a source of information. Drawing upon psychological theories about social comparison processes, we hypothesize that social reference groups underlie market segments. New reference groups can emerge from social comparison processes, leading to the establishment of new submarkets and the evolution of aggregate consumer heterogeneity. These propositions are tested with series of cross-sectional surveys on footwear consumption of German men between 1980 and 1991. Using latent class models, we describe the emergence of the submarket for athletic shoes as a function of the appearance and establishment of a new social consumer group.; published in: Journal of Business Research, Vol 60 (8) 2007, 836-847

#0603 (PDF)
A. Frenzel Baudisch
Continuous Market Growth Beyond Functional Satiation. Time-Series Analyses of U.S. Footwear Consumption, 1955-2002: Market growth is driven by product innovation. Beyond functional satiation the marginal utility of product performance and variety decreases. We argue that social comparisons underlying innovation diffusion results in consumer motivations for upward assimilation toward the behavior of better performing others, even beyond functional requirements. We distinguish consumption growth patterns driven by functional vs. assimilating motivations. These patterns are tested by time-series analyses of U.S. Footwear consumption between 1955 and 2002. The acceleration of market growth since the 1970s is statistically explained by changes in price, cross-price elasticity, and the increasing demand for innovations, according to our theoretical account of consumption motivations beyond functional satiation.

#0602
T. Brenner, C. Werker
A Practical Guide to Inference in Simulation Models: This paper introduces a categorization of simulation models. It provides an explicit overview of the steps that lead to a simulation model. We highlight the advantages and disadvantages of various simulation approaches by examining how they advocate different ways of constructing simulation models. To this end, it discusses a number of relevant methodological issues, such as how realistic simulation models are obtained and which kinds of inference can be used in a simulation approach. Finally, the paper presents a practical guide on how simulation should and can be conducted.; published as: 'A Taxonomy of Inference in Simulation Models' in: Computational Economics, Vol. 30 (3), October 2007, 227-244.

#0601 (PDF)
G. Buenstorf
Perception and pursuit of entrepreneurial opportunities: an evolutionary economics perspective: Considerable debate surrounds the concept of entrepreneurial opportunities. This paper contributes to the discussion by bringing in concepts and findings from evolutionary economics. It makes three points. First, adopting an evolutionary market process perspective sheds new light on the nature of opportunities. Second, not only the pursuit of entrepreneurial opportunities, but also the further development of the entrepreneurial venture is dependent on subjective opportunity perception and interpretation. Third, findings on industry evolution help understand how opportunities, as well as agents' ability and willingness to pursue them, change over time. Effects of pre-entry experience on opportunity recognition and firm performance are also discussed.

Papers 2005 Top

#0524
U. Witt
Reasoning About Novelty: Novelty is ubiquitous in science, technology, and economic life. It drives the growth of human knowledge. However, an analysis of novelty and its emergence faces deep epistemological and methodological problems. Despite its great significance, novelty is therefore a neglected topic in scientific discourse. To make headway, this paper distinguishes principles of generating and interpreting novelty. Insoluble problems are shown to reside in the interpretation part. At an abstract level, they can be circumvented and the nature and some effects of novelty be discussed. A notion of degrees of novelty can thus be derived and compared to degrees of (un-) certainty.; published as: "Propositions about Novelty" in: Journal of Economic Behavior & Organization, Vol. 70, 2009, 311-320. doi:10.1016/j.jebo.2009.01.008

#0523 (PDF)
T. Brenner
A Stochastic Theory of Geographic Concentration and the Empirical Evidence in Germany: A stochastic model of the evolution of the firm population in a region and industry is developed. This model is used to make predictions about the expected probability distribution of the firm number in regions and their dynamics. Data on the spatial distribution of firms in Germany is used to check the predictions and estimate the parameters of the model. This is done for 196 industries separately.

#0522 (PDF)
C. Schubert
Fairness in Urban Land Use: An Evolutionary Contribution to Law & Economics: Markets for complex, multi-faceted goods normally require a complex institutional framework to function properly, i.e., to lead to patterns of outcomes that are deemed acceptable by the individuals involved. This paper examines the institutional underpinnings of the market for urban land use rights, taking both German and U.S. public and private land use law as a case in point. Apart from efficiency considerations that have been discussed in the literature, the individuals' preferences regarding the fairness of (i) the contents of urban land use rights and (ii) the distribution of costs and benefits induced by innovative land uses have been largely neglected. It is argued that investigating the impact of these preferences (and the underlying informal fairness norms) on the legal treatment of land use rights provides a key opportunity to construct an alternative Law & Economics approach that is compatible with an evolutionary perspective on economic land use decisions.

#0521
A. Marciano
Economists on Darwin's theory of social evolution and human behaviour: The purpose of this article is to analyse the way economists interested in social and economic evolution cite, mention or refer to Darwin. We focus on the attitude of economists towards Darwin's theory of social evolution – an issue he considered as central to his theory. We show that economists refer to and mention Darwin as a biologist and neglect or ignore his theory of social and cultural evolution. Three types of reference are identified: first, economists view and quote Darwin as having borrowed concepts from classical political economists, Malthus and Smith. Darwin is then mentioned to emphasize the existence of economic theories of social evolution. Second, economists refer to and cite Darwin from the perspective of the use of biological concepts in social sciences. Darwin's biological theories are then equated with those of Spencer. From these two perspectives, Darwin's theory of social evolution is ignored and Darwin considered as a biologist exclusively. Third, economists acknowledge the existence of Darwin's general (biological and social) theory of evolution. Darwin is then considered and quoted as a biologist and a social evolutionist.; published as: "Economists on Darwin's theory of human nature", The European Journal of the History of Economic Thought, 2007, 14 (4), 681-700.

#0520
G. Buenstorf
Evolution on the Shoulders of Giants: Entrepreneurship and Firm Survival in the German Laser Industry: This paper studies 40 years of evolution in the German laser industry to test the generality of evolutionary patterns observed in the U.S. laser industry. Key characteristics found in the U.S. industry are also present in Germany. There is sustained entry into the industry, and neither a shakeout nor first-mover advantages of early entrants are observed. A survival analysis finds that similar to the U.S. industry, laser firm spin-offs were systematically more successful than academic startups. Differences in survival and determinants of the spin-off process are traced for alternative kinds of spin-offs, including firms started by serial entrepreneurs.; published in: Review of Industrial Organization, 30 (2007), 179-202.

#0519 (PDF)
M. A. Maggioni, T. E. Uberti
International networks of knowledge flows: an econometric analysis: In this paper we address the manifold nature of knowledge through the analysis of four distinct but complementary phenomena (Internet hyperlinks, European research networks, EPO co-patent applications, Erasmus students mobility) that characterize knowledge as an intrinsic relational structure (directly) connecting people, institutions and (indirectly) regions across five European countries. We study the structure (in terms of density, clustering and centralisation) of these networks through network analysis techniques and test the influence of geographical distance as opposed to sectoral (based on the industrial distribution of the innovative activity) and functional (based on the value of the RSII European technological leadership index) distances in shaping the strength of knowledge relations though a gravitational model. The empirical analysis shows the existence of a polarized centre-periphery hierarchy of European regions that is reflected in the structure of knowledge flows. By using a "gravitational" model we demonstrate that, far from the claim of the "death of distance", geographic distance is still relevant for determining the structure of inter-regional knowledge flows. Functional and sectoral distances play also a crucial role suggesting that knowledge flows easily between similar (according to their scientific, technological and sectoral characteristics) regions. If the EU intends to build a "truly European" Research Area in which the networking of "centres of excellence" acts as "catalysts for backward areas" this target may still be far away.

#0518 (PDF)
K. Chandrasekhar, S. Bhaduri
Vicarious Learning and Socio-Economic Transformation in Indian Trans-Himalaya: An evolutionary tale of economic development and policy making: Recently, it has been suggested that the process of economic development should ideally be viewed as a socioeconomic transformation. Such a view requires a comprehensive understanding of how agents learn and change their behaviour. However, these aspects have only been inadequately addressed in development theory. This paper argues that social-cognitive vicarious learning theories can become a useful methodological tool by incorporating a triadic interaction between personal factors (beliefs, values), behaviour and environment. Our analysis is based on a survey of the Indian trans-Himalayan regions. The development trajectory of these regions suggests that a proper understanding of the vicarious learning mechanism provides crucial insight into the speed of socioeconomic transformations. It also helps to identify appropriate change agents within a society and, in turn, underscores the need for a comprehensive, yet flexible, development policy framework.

#0517 (PDF)
C. Schubert
A Note on the Principle of 'Normative Individualism': According to the principle of Normative Individualism, the evaluation of economic states and processes should be guided exclusively by the wishes of the individuals who are seen as the only bearer of values. Despite its intuitive appeal and its almost universal acceptance in normative economics (i.e., Welfare Economics as well as Constitutional Economics), the principle itself has received only scarce, mostly skeptical attention in the literature. It has even less been discussed from an explicitly evolutionary perspective on human preference formation processes. It is argued that the principle may be made compatible with such a perspective if it is transformed into a concept of "developmental individualism" that encompasses three sets of criteria, viz. preference-based, opportunity-based and distributive justice criteria.

#0516 (PDF)
T. Brenner
The Regional Industry-size Distribution - An Analysis of all Types of Industries in Germany: This paper studies the distribution of the number of firms and employees in regions and industries. Various predictions for this distribution are deduced from theoretical considerations. Then, the empirical distributions of 198 industries in Germany are analysed. It is found that different kinds of industries show quite different distributions.

#0515 (PDF)
C. Baden-Fuller, S.G. Winter
Replicating Organizational Knowledge: Principles or Templates?: We discuss how firms can replicate practices and knowledge embedded in practices by following principles, with no direct reference to an extant working example (template). Definitions are provided for the key concepts of templates, principles, and background knowledge. We address the challenges of providing operational measures for successful replication, and for comparing the efficacy of principles and templates. By using two longitudinal case studies of replication across the units of two multi-unit organizations, we support the central claim that in certain circumstances replication by principles can be as speedy and cost effective as replication with templates, and deliver results of comparable quality. The principle contingencies affecting the relative performance of the two methods are identified. We also point out that replication efforts can be a source or incubator, as well as an application area, for dynamic capabilities in an organization. We briefly suggest what the results may mean for theories of knowledge-based competition.

#0514 (PDF)
Richard Day
Microeconomic Foundations for Macroeconomic Structure: The models used in economic theory, though necessarily abstract, should be consistent with the nature of decision making behavior. A formal metaphor of individual behavior as a continuous flow indicates certain requirements that theories of consumer, producer, and economywide behavior should exhibit. A family of discrete time, recursive optimizing models is suggested as the appropriate building block for further developing dynamic economic theory.

#0513 (PDF)
B. Loasby
Entrepreneurship, Evolution and the Human Mind: Schumpeterian 'development from within' requires imagination, skill and motivation; so does Cattaneo's 'psychology of wealth'. Neither can be encompassed by models that rely on deductive rationality, but are twin products of Knightian uncertainty, where the absence of demonstrably correct procedures allows individuals to create domain-limited mental structures. The human mind (as studied by Smith, Marshall and Hayek), is a product of biological evolution which supports the evolution of knowledge and of economic systems. These are non-biological processes; both require (fallible) bounds to uncertainty, which are provided by (evolving) formal and informal organisation, including institutions.

#0512
O. Sorenson, J. Singh, L. Fleming
Science, social networks and spillovers: Previous empirical research has established that science appears to stimulate the widespread diffusion of knowledge. The exact mechanism through which science catalyzes knowledge flow, however, remains somewhat ambiguous. This paper investigates whether the observed knowledge diffusion associated with science-based innovation genuinely stems from the norm of openness and incentives for publication, or whether it arises as an artifact of scientists having more dispersed social networks that facilitate the dissemination of tacit knowledge. Our findings support the former possibility: We use patent citation patterns to track knowledge flows, and find that science-based innovations diffuse more widely even after controlling for the underlying social networks of researchers as measured using data on prior collaborations.; published in: Industry & Innovation, 14: 219-238 (2007)

#0511 (PDF)
W. Ruprecht
From Carl Menger's Theory of Goods to an Evolutionary Approach to Consumer Behaviour: A characteristic feature of economic development is the ever changing structure of consumption patterns. Reducing the explanation of this phenomenon to changing prices, finally caused by changes in the availability of goods (or characteristics), would neglect a major force driving this change, i.e. the variation of consumer wants and consumer knowledge. The present paper aims at sketching an evolutionary framework for the analysis of consumer behaviour that takes account of these features. For this purpose, Carl Menger's theory of goods is taken as a starting point. Whereas economists after the 'marginalistic revolution' were almost exclusively concerned with the determinants of exchange value and developing price theory, Menger puts as much emphasis on the user value as on the exchange value. Regarding the way of how user value changes a connection between Menger's 19th century theory of goods and 20th century learning theories is established. The problem of how to get from individual learning processes to aggregate consumption patterns is approached by recollecting the genetic underpinnings of human learning and its contingency on certain physical and social conditions. Taking into account that these conditions are dynamic, the presented approach allows interpreting collective learning processes as historical events and makes them fruitful for the analysis of economic change.

#0510
U. Witt
Firms as Realizations of Entrepreneurial Visions: In the debate on why firms exist, the question of who chooses between firms and markets and on what basis is rarely addressed. This paper argues that the choice is a core element of the entrepreneurial pursuit of visions or conceptions of business opportunities. To successfully organize resources into the envisioned businesses – be it via firms or markets – resource owners must be coordinated on the entrepreneur's conception of the business and be motivated to perform properly. To solve the dual problem, the organizational form of the firm offers the entrepreneur unique advantages not feasible under the organizational form of markets.; published in: Journal of Management Studies, 44 (7), 2007, 1125-1140.

#0509 (PDF)
T. Broekel, T. Brenner
Local Factors and Innovativeness – An Empirical Analysis of German Patents for Five Industries: A growing body of work emphasizes the role that the spatial component plays in the innovation process. These perspectives brought the region's infrastructure and its endowment with crucial factors into the focus of research. Given that these factors do significantly influence the innovativeness of local firms, it is important to identify precisely which regional characteristics matter. The aim of this paper is to identify a number of key influences out of a multitude of structural factors that are thought to influence the firm's innovation activity. We examine more than eighty variables that approximate the financial, geographical and social-economic factor endowment of a region. The variables are tested with a linear and log - linear model. The two staged procedure examines the variable's bivariate correlation with patent data of five industries. Based on these outcomes multivariate regression models are applied in the second stage. The results for the different models are compared and their advantages and disadvantages are discussed. We find a strong impact of economic agglomeration, extramural science institutions and human capital. In the case of human capital, especially the graduates at the technical colleges are collocated with high regional innovativeness. Furthermore, significant differences are observed for the five industries and for using the two models.

#0508 (PDF)
G. Buenstorf, S. Klepper
Heritage and Agglomeration: The Akron Tire Cluster Revisited: We use new data on the location and background of entrants into the U.S. tire industry to analyze the factors that caused the industry to be so regionally concentrated around Akron, Ohio, a small city with no particular advantages for tire production. We analyze the states where firms entered and for the Ohio entrants the counties where they originated and entered, and we conduct various analyses of how proximity to other tire firms and to demanders affected the longevity of tire producers. We also examine how the heritage of the Ohio entrants influenced their longevity. Our findings suggest that the Akron tire cluster grew primarily through a process of organizational reproduction and heredity rather than through agglomeration economies, as has been commonly posited by scholars of the industry.

#0507 (PDF)
U. Witt
From Sensory to Positivist Utilitarianism and Back - The Rehabilitation of Naturalistic Conjectures in the Theory of Demand: Demand theory grew out of the revision of utilitarianism. The original, Benthamite program – based on a naturalistic, hedonic interpretation of behavior – was replaced by an abstract, subjectivist approach, a motivational mechanics. The implications – expressed exclusively in observable quantities, prices, and incomes – were developed in demand theory. The paper discusses major steps and consequences of the revision together with more recent partial revocations and attempts at reintroducing a naturalistic interpretation. The latter can be enhanced, it is argued, by integrating the (non-utilitarian) theory of wants, a long-standing, but currently much neglected, source of empirical reflections on the motivations of economic behavior.

#0506
R. Joosten
A small Fish War: an example with frequency-dependent stage payoffs.: Two agents possess the fishing rights to a lake. Each period they have two options, to catch without restraint, e.g., to use a fine-mazed net, or to catch with some restraint, e.g., to use a wide-mazed net. The use of a fine-mazed net always yields a higher immediate catch than the alternative. The present catches depend on the behavior of the agents in the past. The more often the agents have used the fine-mazed net in the past, the lower the present catches are independent from the type of nets being used. We determine feasible rewards and provide (subgame perfect) equilibria for the limiting average reward criterion using methods inspired by the repeated-games literature. Our analysis shows that a `tragedy of the commons' can be averted, as sustainable Pareto-efficient outcomes can be supported by subgame perfect equilibria.; published as: "Small Fish Wars: A new class of dynamic fishery-management games" in: ICFAI J Managerial Economics 5, 2007, pp. 17-30.

#0505 (PDF)
E. Stam, E. Garnsey
New Firms Evolving in the Knowledge Economy; problems and solutions around turning points.: This paper explores and explains the emergence and growth of new firms in the knowledge economy. The resource-based view, capabilities approach, and evolutionary economics are used as a foundation for a developmental approach. The development of the firm is conceptualized in terms of processes that include opportunity recognition, resource mobilization, resource generation and resource accumulation, which lead to the development of competences and capital in a base made up of productive, commercial and financial resources. Problems originating within or outside the firm may deplete the productive, commercial and asset base, leading to turning points in the life course of these firms. These have negative consequences when problems are not solved, but positive consequences when they lead to new solutions and the development of new competence. The empirical study shows that even in an elite sample of young fast-growing firms, most firms face turning points in their life course, and thus do not grow in a continuous way. The study shows that quantitative growth indicators do not always reveal growth problems that have been faced by new firms. Some problems do not negatively affect the employment growth of the firm, and other problems are solved before growth stagnates. The qualitative analysis shows that young firms are almost always in disequilibrium: there is almost never a perfect match between the constituents of their resource base, between input resources and requirements for expansion. This explains why continuous growth is so unlikely. Although every firm seems to grow in a unique manner, there is evidence for the presence of a limited set of necessary mechanisms for the growth of (new) firms, which work out in particular ways given the specific context and history of these firms.

#0504 (PDF)
U. Witt, C. Zellner
Knowledge-based Entrepreneurship: The Organizational Side of Technology Commercialization: New knowledge with commercial potential is continually created in academic institutions. How is it turned into economically valuable businesses? This paper argues that the transfer is an entrepreneurial process. To understand this, the actions and the constraints characteristic for the entrepreneurial reshaping of the division of labor must be recognized. In the case of knowledge-based entrepreneurship, specific constraints result from the peculiarities of scientific knowledge – epitomized by contrasting tacit and encoded knowledge. Scientifically trained labor is required for transferring both forms of knowledge. However, the mode of transfer differs crucially and shapes the organizational form of commercializing new scientific knowledge.

#0503 (PDF)
L. Andreozzi
Hayek Reads the Literature on the Emergence of Norms: Hayek's approach to cultural and institutional evolution has been frequently criticized because it is explicitly based on the controversial notion of (cultural) group selection. In this paper this criticism is rejected on the basis of recent works on biological and cultural evolution. The paper's main contention is that Hayek employed group selection as a tool for the explanation of selection among several equilibria, and not as a vehicle for the emergence of out of equilibrium behavior (i.e. altruism). The paper shows that Hayek's ideas foreshadowed some of the most promising developments in the current literature on the emergence of norms.

#0502
G. Buenstorf
How Useful Is Universal Darwinism as a Framework to Study Competition and Industrial Evolution?: The adequate role of Darwinist concepts in evolutionary economics has long been a contentious issue. The controversy has recently been rekindled and modified by the position of "Universal Darwinism", most prominently favored by Geoffrey Hodgson and Thorbjørn Knudsen. They argue that the ontology of all evolutionary systems accords to the basic Darwinist scheme of variation, selection and inheritance. This paper focuses on the emerging application of the Universal Darwinist framework to the analysis of market competition and industrial evolution and gauges its usefulness for organizing an evolutionary approach to industrial economics. Drawing on both a theoretical discussion and recent empirical findings, it argues that selection and inheritance concepts narrowly construed after the biological example are of limited help in studying markets and industries. As an alternative to the 'top-down' approach of Universal Darwinism, 'bottom-up' causal theories are suggested that explain how the interplay of descent, experience and learning shapes the competitive performance of firms in the evolution of industries.; published as: "How useful is generalized Darwinism as a framework to study competition and industrial evolution?" in: Journal of Evolutionary Economics, Vol. 16 (5), 2006, 511-527.

#0501
C. Cordes, C. Schubert
Toward a Naturalistic Foundation of the Social Contract: This paper delivers a step toward a naturalistic foundation of the social contract. While mainstream social contract theory is based on an original position model that is defined in an aprioristic way, we endogenize its key elements, i.e., develop them out of the individuals' moral common sense. To this end, the biological and social basis of moral intuitions and empathy are explored. In this context, a key adaptation during evolution was the one that enabled humans to understand conspecifics as intentional agents. Since these aspects of behavior are considered to be an exaptation, they are not amenable to direct genetic explanations or to rationality-based approaches.; published in: Constitutional Political Economy 18 (2007), 35-62.

Papers 2004 Top

#0424
G. Hodgson, T. Knudsen
The Nature and Units of Social Selection.: On the basis of the technical definition of selection developed by George Price (1995), we describe two forms of selection that commonly occur at the social level, subset selection and generative selection. Both forms of selection are abstract and general, and therefore also incomplete; both leave aside the question of explaining the selection criterion and why entities possess stable traits. However, an important difference between the two kinds of selection is that generative selection can accommodate an explanation of how new variation is created, while subset selection cannot. An evolutionary process involving repeated cycles of generative selection can, in principle, continue indefinitely because imperfect replication generates new variation along the way, whereas subset selection reduces variation and eventually grinds to a halt. Even if the two kinds of selection examined here are very different, they share a number of features. First, neither subset selection nor generative selection implies improvement. Neither kind of selection necessarily lead to efficiency or imply systematic outcomes. Second, both subset selection and generative selection can lead to extremely rapid effects in a social population. Third, in the social domain, both generative selection and subset selection involve choice and preference. Neither form of selection necessarily excludes intentionality. In concluding the article, we single out a challenge for future research in identifying the role of various units of culture in selection processes and the multiple levels at which social selection processes take place.; published in: Journal of Evolutionary Economics, Vol. 16 (5), 2006, 477-489.

#0423
J. Mokyr
Useful Knowledge as an Evolving System: the view from Economic History.: The process of modern growth is different from the kind of growth experienced in Europe and the Orient before 1800 in that it is sustained. Whereas in the premodern past, growth spurts would always run into negative feedback, no such ceiling seems to have been limiting the economic expansion of the past two centuries. The enigma of modern growth has led to a great deal of modeling and speculation amongst economists interested in the topic. One important strand in the literature has been that the Malthusian models that provided much of the negative feedback before 1800, have been short-circuited by the desire and ability of a growing number of individuals to reduce their fertility. Another has been institutional change, which has reduced opportunistic behavior and uncertainty. What has not been stressed enough is that the new technology was made possible by ever increasing "useful knowledge" as Kuznets called it. The sources of this growth in knowledge, surprisingly, have not been fully analyzed. How does "useful knowledge" emerge and develop? Why does it occur in one society and not another, at one time, and why does it take the form it does? This paper examines the details of how new knowledge is created by various combinations of luck, trial and error, inference, and experiment. To analyze the history of useful knowledge, an evolutionary framework to the economic history of useful knowledge is employed.; published in: Lawrence E. Blume and Steven N. Durlauf (eds.), The Economy As an Evolving Complex System III, Oxford University Press, 2005

#0422
R. R. Nelson
Evolutionary Theories of Cultural Change: An Empirical Perspective: The last quarter century has seen a renaissance of the proposal that the processes Darwin put forth as driving biological evolution also provide a plausible theoretical framework for analysis of the evolution of human culture. Modern proponents of the idea that human culture evolves through broad Darwinian processes, involving variation and selective retention, of course recognize that the idea is not a new one. There is no doubt, however, that in recent years the idea has become particularly fashionable among scholars. Many advocates of the position use the term "Universal Darwinism", generally believed to have been coined by Richard Dawkins (1983), to denote the theory they are trying to develop. Because it is better known, in what follows I will use that term to denote the broad idea, which I endorse, rather adopting here David Hull's term "General Selection Processes" (1988) to denote the class of dynamic mechanisms one can see operative in particular form in both biological and cultural change. However, I share with Hull the belief that many of the recent attempts to extend Darwinian theory to human culture have stayed too close to biology, and indeed a narrow perspective on biology. In particular, my concern here is that, while a general theory of evolution driven by variation and selective retention would appear highly relevant to analysis of changes over time in many aspects of human culture, some of the specific features that we now know are involved in the evolution of species, particularly entities like genes, and mechanisms like inclusive fitness, may not carry over easily.; published as: "Evolutionary social science and universal Darwinism" in: Journal of Evolutionary Economics, Vol. 16 (5), 2006, 491-510.

#0421 (PDF)
J.S Metcalfe
Accounting for Evolution: An Assessment of the Population Method: Growth dynamics and structural change are the two central features of variation / selection processes within populations. This paper explores them in terms of three themes, or sets of accounts, namely Logistic Growth Accounting, Competition Accounting and the Price Theorem. The accounting concepts have in common a concern with 'population thinking' and are essential elements in the study of economic development interpreted as the transformation of initial populations of activities into new kinds of populations. Development can be uncovered at many levels in an economic system, for example in the competitive process at the level of industries, sectors and markets. Business rivalry, underpinned by differential innovative activity, is the basis of the differential survival and growth of competing economic activities and the strategies deployed to create sustainable differences in competitive selection characteristics are at the core of the capitalist dynamic interpreted as an adaptive, evolutionary process. This kind of evolutionary argument is necessarily concerned with growth rate dynamics and the explanation of the diversity of growth rates across entities in a population. The accounting relationships presented are a prelude to deeper causal explanations of evolution in institutions, economies and perhaps in knowledge itself.

#0420
J. Vromen
Routines, genes and program-based behaviour: It is argued that the 'routines as genes' analogy is misleading in several respects. Neither genes nor routines program behaviour, if this is taken to involve, first, that they determine behaviour and, second, that they do so in a way that excludes conscious, deliberate choice. On a proper understanding of 'gene' and 'routine', knowledge of genes and routines falls far short of predicting behaviour. Furthermore, conscious, deliberate choice is not ruled out when genes or routines are operating. There is a sense in which it can be maintained that genes are (or act as) programs and that individual behaviour is based on them. Such programs might display considerable stability, but their causal impact on behaviour is so remote and indirect that knowing them has little predictive power. It might be possible to identify programs also at levels of organization higher than that of genes that have greater predictive power, but such programs are likely to be unstable over time. On a non-inflationary understanding of 'routines', individual organization members can be viewed as programs on which the smooth functioning of routines is based. This is a far cry from the claim that routines determine firm behaviour, let alone from the claim that they are key success variables in explaining how well (in terms of profitability) firms perform.; published in: Journal of Evolutionary Economics, Vol. 16 (5), 2006, 543-560.

#0419 (PDF)
A. Field
Why Multilevel Selection Matters: In spite of its checkered intellectual history, and in spite of the myriad proposals of alternative models that claim to account for the broad range of human behavior and to dispense with the need for selection above the organism level, a multilevel selection framework remains the only coherent means of accounting for the persistence and spread of behavioral inclinations which, at least upon first appearance at low frequency, would have been biologically altruistic. This argument is advanced on three tracks: through a review of experimental and observational evidence inconsistent with a narrow version of rational choice theory, through a critique of models or explanations purporting to account for prosocial behavior through other means, and via elaboration of the mechanisms, plausibility, and intellectual history of group selection.

#0418
P. Windrum
Heterogeneous preferences and new innovation cycles in mature industries: the camera industry 1955-1974.: The paper examines the innovation dynamics of the mature camera market between 1955 and 1974. This highlights the importance of heterogeneous preferences in determining industry structure. By recognising and accommodating consumer heterogeneity, new firms engaged in radical product and process innovation and overcame the first-mover advantages of dominant firms. The case raises important issues for our understanding of industry life cycles. First, a number of innovation cycles are possible over the life cycle. Second, new rounds of entry, exist and market shake-out can occur, with new, innovative entrants displacing old firms. If the new firms are in developing countries then a shift in global production occurs. Third, a basic tenet of Porterian competitive advantage is overturned because success is based on innovation not wage-cost advantages. Fourth, market structure can change, the industry dividing into a number of market niches that contain distinct user groups. Fifth, incremental modular innovations may be adopted by some user groups but not by others. Consequently, incremental product innovations may be adopted in low-priced goods but not in high-priced goods.; published as: Heterogeneous preferences and new innovation cycles in mature industries: the amateur camera industry 1955–1974, Industrial and Corporate Change 14 (2005), 1043-1074.

#0417 (PDF)
R. Joosten
Strategic Interaction and Externalities: FD-games and pollution.: To analyze strategic interaction which may induce externalities, we designed Bathroom Games with frequency-dependent stage payoffs. Two people regularly use a bathroom, before leaving they can either clean up the mess made, or not. Cleaning up involves an effort, so this option always gives a lower immediate utility than not cleaning up. The immediate utility of using the bathroom depends on its condition: the cleaner it is, the higher the utility. The pollution at a certain point in time depends on how often the players did not clean up in the past. Furthermore, as the bathroom's condition deteriorates, cleaning up becomes more burdensome, leading to increasing disutilities. We follow the analysis of repeated games and find that if the agents are sufficiently patient, individually-rational rewards can be supported by (subgame perfect) equilibria involving threats. In almost every such equilibrium, the bathroom is cleaned up regularly.

#0416
T. Brenner
Agent Learning Representation - Advice in Modelling Economic Learning: This paper presents an overview on the existing learning models in the economic literature. Furthermore, it discusses which of these models should be used under what circumstances and how adequate learning models can be chosen in simulation approaches. It gives advice for getting along with the many models existing and picking the right one for the own application.; published in: L. Tesfatsion and K.L. Judd (eds.). Handbook of Computational Economics, Vol. 2. Elsevier Science, 2006, 895-947.

#0415
C. Cordes
Darwinism in Economics: From Analogy to Continuity: Currently there is an ongoing discussion about how Darwinian concepts should be harnessed to further develop economic theory. Two approaches to this question, Universal Darwinism and the continuity hypothesis, are presented in this paper. It is shown whether abstract principles can be derived from Darwin's explanatory model of biological evolution that can be applied to cultural evolution. Furthermore, the relation of the ontological basis of biological and cultural evolution is clarified. Some examples illustrate the respective potential of the two approaches to serve as a starting-point for theory development.; published in: Journal of Evolutionary Economics, Vol. 16 (5), 2006, 529-541.

#0414 (PDF)
F. L. Pryor
Economic Systems of OECD Nations: Impact and Evolution: This essay argues that economic systems should be defined in terms of clusters of complementary institutions. To show how such an approach can be carried out, I use a cluster analysis technique and data on forty different economic institutions in OECD nations to isolate four quite different economic systems. After specifying the most important institutional clusters in each system, I then examine what impact these economic systems have on various indicators of economic performance. Finally, I show how such an approach allows particular evolutionary patterns of the systems to be analyzed.

#0413
C. Sartorius
Second-order sustainability – conditions for sustainable technology development in a dynamic environment: Innovations can be important means to the achievement of improved sustainability. Due to path dependencies, however, the transition from an existing technological trajectory to a more sustainable one is often impeded by significant barriers. These barriers themselves are subject to substantial change over time. Accordingly, periods of stability can be distinguished from periods of instability when a new trajectory can be reached more easily. Sustainable innovations often rely on governmental regulation and the economic burden arising from regulation will be lower in periods of instability. Moreover, innovations are generally associated with fundamental uncertainty such that it becomes impossible to predict the long-run consequences of specific innovations. Under these circumstances, it is essential to facilitate the change between trajectories. The general capability to change from less to more sustainable technological trajectories, or second-order sustainability, is therefore a precondition for achieving (first-order) sustainability. A number of factors (and corresponding indicators) from the techno-economic, political, and socio-cultural sphere are identified that help in judging whether, and possibly when, the incumbent industry is sufficiently destabilized and the political system rendered sufficiently favorable to the new, more sustainable technology to make a transition feasible.; published as: Second-order sustainability – conditions for the development of sustainable innovations in a dynamic environment, Ecological Economics, 2006, Vol. 58, 268-286.

#0412 (PDF)
T. Brenner, C. Cordes
The autocatalytic character of the growth of production knowledge: What role does human labor play?: This paper analyzes how the qualitative change in human labor occurs in mutual dependence with the advancement of the epistemic base of technology. Historically, a recurrent pattern can be identified: humans learned to successively transfer labor qualities to machines. The subsequent release of parts of the workforce from performing this labor enabled them to spend this spare time in the search for further technical innovations, i.e., the generation and application of ever-more knowledge. A model examines the autocatalytic relationship between the production of commodities and knowledge. The driving forces of these processes and the mechanisms that limit them are analyzed.

#0411
C. Schubert
Hayek and the Evolution of Designed Institutions: a Critical Assessment: While Evolutionary Economics has devoted much attention to the attempt to explain the evolution of institutions that emerge spontaneously, the genesis, diffusion and evaluation of consciously designed institutions has largely been neglected. This paper tries to show (i) how an evolutionary approach to this problem could look like and (ii) in what way Friedrich A. v. Hayek's work can contribute to it. Three aspects are identified as playing a key role in this respect: first, Hayek's positive theory of both the legislative and the judicial law-making process; second, his normative theory, centered on the instrumental value of individual freedom for maintaining the epistemic superiority of spontaneous social orders; and third, his concept of democracy, based on a dynamic deliberation (instead of a static aggregation) view on individual preferences. While there are more or less wide gaps in all three original accounts, there are ways to fill them in an arguably "Hayekian" way and to combine the different threads to a conceptual basis for a Hayekian political economy.; published in: J. Backhaus (ed.), Entrepreneurship, Money and Coordination, Cheltenham: E. Elgar, 2005, 107-130.

#0410 (PDF)
C. Werker, T. Brenner
Empirical Calibration of Simulation Models: This paper discusses how the results of simulation models can be made more reliable and the method of simulating therefore more widely applicable. We suggested to calibrate simulation models empirically and developed a methodology based on Critical Realism in order to so. We suggested combining the procedures of two strands of literature: the empirical underpinning of the assumptions (like in microsimulations) and the empirical check of the implications (like in Bayesian inference). Both these strands of literature are mainly concerned with predicting future developments. We, instead, aim to infer statements about causal relations and characteristics of a set of systems or dynamics, such as, e.g., the development of an industry, that have a general validity for this set of systems or dynamics. In other words, instead of deriving probabilistic predictions of the future and statements of the current situation and dynamics of one single system we developed a methodology to gain general statements about the features of systems and dynamics.

#0409 (PDF)
M. Peneder
Tracing Empirical Trails of Schumpeterian Development: Schumpeterian development is characterised by the simultaneous interplay of growth and qualitative transformations of the economic system. At the sectoral level, such qualitative transformations become manifest as variations in the sectoral composition of production. Following the implementation of Harberger's method of visualising the impact of differential productivity growth, dynamic panel estimations are applied to a standard growth model modified to include specific structural variables for both the manufacturing and the services sectors. Covering 28 countries over the period between 1990 and 2000, the results give empirical substance to the evolutionary emphasis on Schumpeterian development as opposed to mere aggregate growth.

#0408
D. Helbing, U. Witt, S. Lämmer, T. Brenner
Network-Induced Oscillatory Behavior in Material Flow Networks and Business Cycles: Network theory is rapidly changing our understanding of complex systems, but the relevance of topological features for the dynamic behavior of metabolic networks, food webs, production systems,information networks, or cascade failures of power grids remains to be explored. Based on a simple model of supply networks, we offer an interpretation of instabilities and oscillations observed in biological, ecological, economic, and engineering systems. We find that most supply networks display damped oscillations, even when their units - and linear chains of these units - behave in a non-oscillatory way. Moreover, networks of damped oscillators tend to produce growing oscillations. This surprising behavior offers, for example, a new interpretation of business cycles and of oscillating or pulsating processes.The network structure of material flows itself turns out to be a source of instability, and cyclical variations are an inherent feature of decentralized adjustments.; published in: Physical Review E 70, 056118, 2004, 1-6.

#0407 (PDF)
G. Buenstorf, S. Klepper
The Origin and Location of Entrants in the Evolution of the U.S. Tire Industry: During its early and formative years, the U.S. tire industry was heavily concentrated around Akron, Ohio. We test the extent to which entrants in Ohio were attracted to the Akron area by agglomeration benefits, contributing to a self-reinforcing process envisioned in many modern theories of geography. We trace the geographic and intellectual heritage of the Ohio entrants and analyze the factors underlying their creation and location at the county level. Our findings suggest it was the creation of entrants, largely spurred by the supply of entrepreneurs, and not the attraction of entrants to the Akron area that fueled the agglomeration of the industry there.

#0406
U.-M. Niederle
From Possession to Property: Preferences and the Role of Culture: The paper investigates the interplay between the institutions of law and property and innate propensities towards possession. The questions to be answered are: How do property relations emerge in historical-anthropological terms in contrast to the well-known constitutional perspective and what role do preferences - as human cognitive and behavioural dispositions - play in this process? The paper conjectures that possessiveness towards specific objects together with a primary attitude toward first rules of law, that is some rule preference and commitment, shape patterns and outcomes of property relations. More complex structures of property relations have developed together with technological advances. The differences in property relations across different societies result partly from diverse ecological conditions and partly from culturally transmitted traditions; published in: J. Finch, M. Orillard (eds.): Complexity and the Economy, Cheltenham: Edward Elgar, 2005, pp. 77-104.

#0405
U. Witt
On Novelty and Heterogeneity: Novelty and heterogeneity are two closely related issues. Heterogeneity is not only a result of the emergence of novelty which creates variety in any evolving system. Heterogeneous elements are also required as inputs for the recombination processes underlying the generation of novelty. However, while heterogeneity figures prominently in computational and agent-based economics and in complex adaptive systems analysis, novelty and its emergence are neglected topics. In order to make progress with the latter the paper starts with a discussion of how novelty is being generated both in the case of genetic novelty and that of mental novelty. For the case of mental novelty it is then shown that the bottleneck in our understanding of novelty is not the generation procedure proper, but rather the procedure by which our mind evaluates or interprets the outcome. On the basis of this distinction it is briefly sketched how, for different forms of novelty, the degree of novelty may be rank-ordered and how the limits to predictability in the context of novelty vary with that degree.; published in: T. Lux, S. Reitz, E. Samanidou (eds.): Nonlinear Dynamics and Heterogeneous Interacting Agents, Heidelberg: Springer, 2005, pp. 123-138.

#0404
E. Ostrom
The Working Parts of Rules and How They May Evolve Over Time: Drawing on extensive research related to successful and unsuccessful efforts to govern common-pool resources, I wish to address what I consider to be the next important step in our theoretical understanding of complex settings. I address how we can identify the working parts of rules. It is difficult to study the evolution of institutions without a clear language for describing and analyzing the underlying working parts creating markets, governments at all levels, private property, and structures inside individual firms. Thus, this paper identifies the rules underlying institutional games so that we can study their evolution.; published as: "The Complexity of Rules and How They May Evolve Over Time", in: C. Schubert, G. v. Wangenheim (eds.): Evolution and Design of Institutions, Oxford: Routledge, 2006, pp. 100-122

#0403
F. Parisi, G. v. Wangenheim
Legislation and Countervailing Effects from Social Norms: Human behavior is influenced both by internal norms or values ("what people think to be just behavior") and exogenous restrictions including legal sanctions. In the paper we study the interaction between these legal and extralegal forces and highlight the possibility of a countervailing effect of norms and individual in the face of changes in the legal environment. Building on the stylized fact that people's individual values are partly static and partly subject to change overtime, we consider these social and legal forces as two main factors that contribute to the change in individual values. Legal innovation that departs from current values may lead to private enforcement norms or civil disobedience. Through private enforcement of expressive laws and through civil disobedience, individuals reveal their approbation or disapproval of laws to other individuals. This may lead to a hysteresis effect on individual values that may have a reinforcing or countervailing effect on the legal innovation. Our model of countervailing norms complements the existing literature on expressive law by showing conditions under which the equilibrium behavior may move in the opposite direction from that intended by the law. Our model studies the dynamics of such problem and unveils several important predictions and practical implications for the design of law.; published in: C. Schubert, G. v. Wangenheim (eds.): Evolution and Design of Institutions, Oxford, Routledge, 2006, pp. 25-55.

#0402
V. J. Vanberg
Human Intentionality and Design In Cultural Evolution: The purpose of this paper is to take a closer look at the relation between human intentionality and design on the one side and the "blind" forces of evolution on the other. Specifically, I discuss two issues that Ulrich Witt has raised in recent publications, namely, first, the issue of whether the role that human intelligence and intentionality play in man-made or cultural evolution requires us to adopt a non-Darwinian concept of evolution, and, second, the issue of what the fact that cultural evolution is man-made implies for our capacity to "control" the evolutionary process and for our "responsibility" with regard to its overall outcomes.; published in: C. Schubert, G. v. Wangenheim (eds.): Evolution and Design of Institutions, Oxford: Routledge, 2006, pp. 197-212.

#0401
C. Cordes
Veblen's 'Instinct of Workmanship', its Cognitive Foundations and Some Implications for Economic Theory: This paper delivers some findings from the present-day cognitive sciences on man's cognitive dispositions that support aspects of Veblen's "nstinct of workmanship," which is an essential starting point of his evolutionary theory of institutional change. These cognitive dispositions partly govern which information will be subject to profound contemplation and be easy to disseminate within a population. Furthermore, they may give rise to a bias in human creativity. As a result, some cognitive foundations of the "nstinct of workmanship" may induce a general direction in long-term economic development by influencing the continuous accretion of knowledge during cultural evolution.; published in: Journal of Economic Issues, Vol. 39 (1), 2005, 1-20.

Papers 2003 Top

#0312 (Abstract)
G. Buenstorf, P. Murmann
Ernst Abbe's Scientific Management: Theoretical Insights from a 19th Century Dynamic Capabilities Approach: published in: Industrial and Corporate Change, 14 (2005): 543-578.

#0311 (Abstract)
C. Schubert
A Contractarian View on Cultural Evolution: published in: C. Schubert, G. v. Wangenheim (eds.): Evolution and Design of Institutions, London: Routledge, 2006, pp. 149-179.

#0310 (Abstract)
C. Cordes
The Human Adaptation for Culture and its Behavioral Implications: published in: Journal of Bioeconomics, Vol. 6 (2), 2004, 143-163.

#0309 (Abstract)
J. Lambooy
The Role of Intermediate Structures and Regional Context for the Evolution of Knowledge Networks and Structural Change

#0308 (Abstract)
T. Brenner, N.J. Vriend
On the Behavior of Proposers in Ultimatum Games: published in: Journal of Economic Behavior & Organization, Vol. 61 (4), 2006, 617-631.

#0307 (Abstract)
U. Witt
The Evolutionary Perspective on Organizational Change and the Theory of the Firm: published in: K. Dopfer (ed.), The Evolutionary Foundations of Economics, Cambridge: Cambridge University Press, 2005, pp 339-364.

#0306 (Abstract)
T. Brenner, S. Greif
The Dependence of Innovativeness on the Local Firm Population - An Empirical Study of German Patents: published in: Industry and Innovation, 13 (2006): 21-39.

#0305 (Abstract)
U. Witt
The Proper Interpretation of 'Evolution' in Economics and the Example of Production Theory: published as: "On the proper interpretation of 'evolution' in economics and its implications for production theory" Journal of Economic Methodology, 11 (2004): 125-146.

#0304 (Abstract)
T. Brenner
An Identification of Local Industrial Clusters in Germany: published in: Regional Studies, Vol. 40 (9), 2006, 991-1004.

#0303 (Abstract)
T. Brenner, P. Murmann
The Use of Simulations in Developing Robust Knowledge about Causal Processes - Methodological Considerations and an Application to Industrial Evolution

#0302 (Abstract)
C. Cordes
Long-term Tendencies in Technological Creativity - A Preference-based Approach: published in: Journal of Evolutionary Economics, Vol. 15 (2), 2005, 149-168.

#0301 (Abstract)
U. Witt
'Production' in Nature and Production in the Economy - Second Thoughts about Some Basic Economic Concepts: published in: Structural Change and Economic Dynamics, 2005, Vol. 16(2), 165-179.

Papers 2002 Top

#0212 (Abstract)
P. Murmann, K. Frenken
Toward a Systematic Framework for Research on Dominant Designs, Technological Innovations, and Industrial Change: updated version; published in: Research Policy, 2006, Vol. 35, pages 925-952

#0211
P. Murmann
The Complex Role of Patents in Creating Technological Competencies: A Cross-National Study of Intellectual Property Right Strategies in the Synthetic Dye Industry, 1850-1914

#0210 (Abstract)
U. Witt
Generic Features of Evolution and Its Continuity - a Transdisciplinary Perspective: published in: THEORIA, Vol. 18 (48), 2003, 273-288.

#0209
G. v. Wangenheim
Stability of Equilibria in Enforcement Games with Increasing Marginal Enforcement Costs

#0208 (Abstract)
U. Witt
Market Opportunity and Organizational Grind - The two Sides of Entrepreneurship: published in: Roger Koppl (ed.), Advances in Austrian Economics, Vol 6, 2003,pp.131-151.

#0207 (Abstract)
S. Klepper, S. Sleeper
Entry by Spinoffs: published in: Management Science 51(8), 2005, 1291-1306.

#0206 (Abstract)
C. Zellner
The Economic Effects of Basic Research: Evidence for Embodied Knowledge Transfer via Scientists' Migration: published in: Research Policy 32 (10), 2003, 1881-1895.

#0205 (Abstract)
T. Brenner
Innovation and Cooperation During the Emergence of Local Industrial Clusters - An Empirical Study in Germany: published in: European Planning Studies, Vol. 13 (6), 2005, 921-938.

#0204 (Abstract)
L. Andreozzi
Network Externalities, Critical Masses and Converters. An Evolutionary Analysis.: published as: "A note on critical masses, network externalities and converters", International Journal of Industrial Organization, Elsevier, 2004. vol. 22(5), pages 647-653, May.

#0203 (Abstract)
L. Dudley, J. Moenius
Creative Destruction in International Trade

#0202 (Abstract)
L. Dudley, U. Witt
Yesterday's Games: Contingency Learning and the Growth of Public Spending: published as: 'Arms and the Man: World War I and the Rise of the Welfare State', in Kyklos 57, 2004, 475-504.

#0201 (Abstract)
G. Buenstorf
Sequential Production, Modular Techniques and Technological Change: published in: Structural Change and Economic Dynamics, 2005, Vol. 16(2), 221-241.

Papers 2001 Top

#0112
U. Witt
How Evolutionary is Schumpeter's Theory of Economic Development?: published in: Industry and Innovation, 2002, Vol.9, pp. 7 - 22.

#0111
R. Joosten
On Repeated Games with Vanishing Actions: published in: International Game Theory Review, 2005, Vol. 7 (1), 107 - 115.

#0110
U. Witt
Social Cognitive Learning and Group Selection - A Hayekian Model of Societal Evolution: published as: "Observational learning, group selection, and societal evolution", Journal of Institutional Economics 4:1 (2008), 1–24.

#0109
W. Wadman
Technological Change, Human Capital and Extinction: published in: Journal of Bioeconomics, 2001, Vol.3, pp. 65 - 68

#0108
T. Brenner, T. Slembeck
Noisy Decision Makers. On Errors, Noise and Inconsistencies in Economic Behavior

#0107
U. Witt
Conceptions vs. Routines - On the Development of Firms and the Evolution of Markets

#0106
C. Sartorius
The Evolution of Social Norms and Values by Means of Social Group Selection: published as: "The Relevance of the Group for the Evolution of Social Norms and Values.", Constitutional Political Economy, 2002, Vol. 13, pp. 149 - 172.

#0105
G. Buenstorf
Designing Clunkers: Demand-Side Innovation and the Early History of the Mountain Bike: published in: J. S. Metcalfe; U. Cantner (eds.): Change, Transformation and Development. Heidelberg: Physica, (2003), pp. 53-70.

#0104
W. Ruprecht
Consumption of Sweeteners: An Evolutionary Analysis of Historical Development: published as: "The historical development of the consumption of sweeteners - a learning approach" Journal of Evolutionary Economics, 15 (2005): 247-272.

#0103
T.Brenner
Self-organisation, Local Symbiosis and the Emergence of Localised Industrial Clusters: published in: T. Brenner, 'Local Industrial Clusters, Existence, Emergence and Evolution, Routledge', London,2004, ch. 2.2

#0102
H. Siegenthaler
Understanding and the Mobilisation of Error - Eliminating Controls in Evolutionary Learning

#0101
U. Witt
The Evolutionary Perspective on Economic Policy Making - Does it Make a Difference?: published as: "Economic Policy Making in Evolutionary Perspective", Journal of Evolutionary Economics, 2003, Vol.13(2), pp. 77-94.

Papers 2000 Top

#0012
F. Belussi
Accumulation of Tacit Knowledge and Division of Cognitive Labour in the Industrial District/Local Production System

#0011
T. Brenner
The Evolution of Localised Industrial Clusters: Identifying the Processes of Self-Organisation: published in: T. Brenner, 'Local Industrial Clusters, Existence, Emergence and Evolution, Routledge', London,2004, ch. 2.4

#0010
G.Z. Sun, U. Witt
Myopic Activity Variations and Aggregate Output Dynamics - A Note on the Behavioral Foundations of the Business Cycle: published as: "Myopic Behavior and Cycles in Aggregate Output. A Note on the Role of Correlated Quantity Adjustments.", Jahrbücher für Nationalökonomie und Statistik, 2002, Vol. … pp

#0009
U. Witt
Genes, Culture, and Utility

#0008
S. Rizzello
Cognition and Evolution in Economics

#0007
U. Witt
Changing Cognitive Frames - Changing Organizational Forms. An Entrepreneurial Theory of Organizational Development: published in: Industrial and Corporate Change, 2000, Vol. 9, pp. 733 - 775.

#0006
M. Wohlgemuth
Democracy as an Evolutionary Method: published in: P. Pelikan, G. Wegner (eds.), 'The Evolutionary Analysis of Economic Policy', Cheltenham: Edward Elgar, 2003, 96-127.

#0005
K. Rathe, U.Witt
The "Nature" of the Firm - Functionalist vs. Developmental Interpretations: published as: "The Nature of the Firm - Static versus Developmental Interpretations.", Journal of Management and Governance, 2001, Vol. 5, pp. 331 - 351.

#0004
B. Flieth, J. Foster
Interactive Expectations: published in: Journal of Evolutionary Economics, 2002, Vol.12(4), pp. 375 - 395.

#0003
T. Brenner, R. Joosten, U. Witt
On Games with Frequency-Dependent Payoffs: published in: International Journal of Game Theory, 2002, Vol 31, pp.609 - 620.

#0002
K. Jakee, G. Z. Sun
Adaptive Preferences and Welfare State Dynamics: A Simple Model: published as: "External habit formation and dependency in the welfare state", European Journal of Political Economy, 2005, Vol 21 (1), 83-98.

#0001
T. Brenner
The Dynamics of Prices - Comparing Behavioural Learning and Subgame Perfect Equilibrium: published as: "A Behavioural Learning Approach to the Dynamics of Prices.", Computational Economics, 2002, Vol. 19 (1), pp. 67 - 94.

Papers 1999 Top

#9906
Proceedings of the Symposium
Assessing the Potential of the Evolutionary Approach to Economics

#9905
G. Buenstorf
Self-organization and Sustainability: Energetics of Evolution and Implications for Ecological Economics: published in: Ecological Economics, 2001, Vol. 33 (1), pp. 119 - 134.

#9904
B. J. Loasby
Decision Premises, Decision Cycles and Decomposition: published in: Industrial and Corporate Change, 2000, Vol. 9, pp. 709 - 731.

#9903
T. Brenner
Consumer Behavior, Reinforcement Learning and the Dynamics of Fashion

#9902
U. Witt
Between Appeasement and Belligerent Moralism - The Evolution of Moral Conduct in International Politics: published in: Public Choice, 2001, 106, pp. 365 - 388.

#9901
R. Joosten
The Odd Couple: Walras and Darwin: published as: "Walras and Darwin: an odd couple?" in: Journal of Evolutionary Economics, 2006, Vol 16 (5), 561-573.

Papers 1998 Top

#9808
S. Stahl
Persistence and Change of Economic Institutions - A Social-Cognitive Approach: published in: P.P. Saviotti, ed., 'Technology and Knowledge. From the Firm to Innovation Systems.', Cheltenham: Edward Elgar, 2000, pp. 263 - 284

#9807
R.Joosten
Evolution as a Hierarchy of Selection and Learning: A General Deterministic Model

#9806
U. Witt
Learning to Consume - A Theory of Wants and the Growth of Demand: published in: Journal of Evolutionary Economics, 2001, Vol.11, pp. 23 - 36.

#9805
P.Pelikan
The Origins of Successful Economic Organizations: A Darwinian Explanation with Room for Self-Organizing

#9804
S.Stahl
An Evolutionary Perspective in Transition Theory

#9803
J.Mokyr
Science, Technology, and Knowledge: What Historians can Learn from an Evolutionary Approach

#9802
T.Brenner, W.Weidlich, U.Witt
International Co-movements of Business Cycles in a 'Phase-locking' Model: published in: Metroeconomica, 2002, 53:2, pp. 113 - 138.

#9801
J.Foster
Competition, Competitive Selection and Economic Evolution: published in: P. Garrouste, ed., 'Evolution and Path Dependence in Economic Ideas: past and present.', Cheltenham: Edward Elgar, 2001, pp. 107 - 132.

Papers 1997 Top

#9706
T.Brenner, U.Witt
Melioration Learning in Games With Constant and Frequency-dependent Pay-offs: published in: Journal of Economic Behavior and Organization, 2003, Vol.50, pp.429 -448

#9705
U.Witt
Economics and Darwinism: published as: 'Bioeconomics as Economics from a Darwinian Perspective.', Journal of Bioeconomics, 1999, Vol. 1, pp. 19 - 34.

#9704
K. Binmore
The Evolution of Fairness Norms: published in: Nordic Journal for Political Economy 23 (1997), 150-173.

#9703
T. Brenner
Reinforcement Learning in 2 x 2 Games and the Concept of Reinforcably Stable Strategies

#9702
J. S. Metcalfe
The Evolutionary Explanation of Total Factor Productivity Growth: Macro Measurement and Micro Process: published in: Revue d'Economie Industrielle, 1997(2), No. 80, pp. 93 - 114.

#9701
U.Witt
'Lock-In' vs. 'Critical Masses' - Industrial Change under Network Externalities: published in: International Journal of Industrial Organization, 1997, Vol. 15, pp. 753 - 773.

Papers 1996 Top

#9606
R.H.Day
Macroeconomic Evolution: Long Run Development and Short Run Policy

#9605
U.Witt
Imagination and Leadership - The Neglected Dimension of the (Evolutionary) Theory of the Firm: published in: Journal of Economic Behavior and Organization, 1998, Vol. 35, pp. 161 - 177.

#9604 (Abstract)
B.Flieth, G.v.Wangenheim
Interactive Opinion Formation In a Multi-Opinion Model

#9603 (Abstract)
T. Brenner
Learning in a Repeated Decision Process: A-Variation-Imitation-Decision Model: published as: "Implications of Routine-Based Learning for Decision Making", European Journal of Economic and Social Systems, 2001, Vol. 15 (3), 131 152.

#9602 (Abstract)
N.J.Foss
Evolutionary Theories of the Firm: Reconstruction and Relations to Contractual Theories: published in: K. Dopfer, ed., 'Evolutionary Economics: Program and Scope'. Boston: Kluwer, 2001, 319 – 355.

#9601
U.Witt
The Political Economy of Mass Media Societies

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