building up social capital in a changing world this paper models the dynamic process through which a large society may succeed in building up its social capital by establishing a stable and dense pattern of interaction among its members in the model agents interact according to a collection of idyosincratic infinitely repeated prisoner s dilemma played on the existing social network this network not only specifies the playing partners but crucially also determines how relevant strategic information diffuses or new cooperation opportunities are found over time the underlying payoffs randomly change i e display some volatility in response to it agents react by creating new links and removing others this combines into a complex but ergodic dynamic process whose analysis is undertaken in different ways first we rely on its ergodicity to compute numerically its long run regularities second we use mean field approximations to derive analytical results both routes are found in accord and also complementary the long run dynamics of the process sharply depends on environmental volatility displaying the following features a only if volatility is not too high can the society sustain a dense social network and thus attain a large average payoff b the social architecture endogenously responds to increased volatility by becoming more cohesive c network based strategic effects are an essential buffer that preclude the abrupt collapse of the social network in the face of growing volatility these conclusions are largely in tune with the points stressed in the social capital literature

corn models in the classical tradition p sraffa considered historically this paper deals with the historical plausibility and analytical validity of what has come to be termed the corn model the ongoing debate is firstly reviewed it is suggested that a definite answer should be based on the logic of the material produce comparisons although these do not lead invariably to a sound application of the corn model neither do they constitute per se a sign of classicism however it is shown that before and after ricardo corn models of various sorts and logical stringency were developed in order to cope with the problem of 1 the determination of the rate of profit in the only basic sector of the economy agriculture independent of any valuation and 2 its primacy over the overall economy copyright 1991 by oxford university press

endogenous neighborhood formation in a local coordination model with negative network externalities the paper studies the evolution of coordination in a local interaction model where agents can simultaneously choose the strategy to play in the game and the size of their neighborhood we focus on pure coordination games played by agents located on one dimensional lattices and we assume that network externalities become eventually negative as neighborhood sizes increase we show that the society almost always converges to a steady state characterized by high levels of coordination and small neighborhood sizes we nd that neighborhood adjustment allows for higher coordination than if interaction structures were static and that large populations attain higher coordination provided that average initial neighborhood sizes are not too small

cooperation through imitation and exclusion in networks we develop a simple model to study the coevolution of interaction structures and action choices in prisoners dilemma games agents are boundedly rational and choose both actions and interaction partners via payoff biased imitation the dynamics of imitation and exclusion yields polymorphic outcomes under a wide range of parameters whenever agents hold some information beyond their interaction neighbors defectors and cooperators always coexist in disconnected components otherwise polymorphic networks can emerge with a center of cooperators and a periphery of defectors any stochastically stable state has at most two disconnected components simulations confirm our analytical results and show that the share of cooperators increases with the speed at which the network evolves increases with the radius of interaction and decreases with the radius of information

more neighbors more efficiency abstract this paper considers a finite population of agents located within an arbitrary fixed network every agent plays a coordination game with his neighbors if one neighbor s payoff from a specific interaction exceeds his average payoff per interaction the neighbor is perceived as better performing over time agents imitate the strategies of their better performing neighbors occasionally they make mistakes sufficient conditions for emergence of pareto efficient and risk dominant conventions are provided the paper also illustrates the main results through relevant examples

social cohesion and the evolution of altruism abstract in this paper we propose a stylized model to study how cohesion may affect the spread and consolidation of altruism in a large population where agents are involved in a local public good contribution game with their neighbors we show that if the contribution cost is moderate neither too high nor too low cooperation can invade and dominate the population if and only if group cohesion displays an intermediate value this reflects an interesting non monotonicity of cohesion in the evolution of altruism while some of it is needed to internalize the benefits of cooperation too much cohesion prevents the spread of altruism among the population at large

meeting strangers and friends of friends how random are social networks we present a dynamic model of network formation where nodes find other nodes with whom to form links in two ways some are found uniformly at random while others are found by searching locally through the current structure of the network e g meeting friends of friends this combination of meeting processes results in a spectrum of features exhibited by large social networks including the presence of more high and low degree nodes than when links are formed independently at random having low distances between nodes in the network and having high clustering of links on a local level we fit the model to data from six networks and impute the relative ratio of random to network based meetings in link formation which turns out to vary dramatically across applications we show that as the random network based meeting ratio varies the resulting degree distributions can be ordered in the sense of stochastic dominance which allows us to infer how the formation process affects average utility in the network

cooperation punishment and immigration abstract we study the incentive to cooperate in a society comprised of citizens and immigrants the level of cooperation is governed by a steady state under population dynamics along with the behavior of individual citizens and immigrants we provide an equilibrium characterization exhibiting a uniquely determined positive level of cooperation in society we then use this framework to study the impact of government programs aimed at punishing immigrants who defect when agents produce offspring we show that a consequence of such punishment is that while the incentive for immigrants to defect decreases there is an equilibrium substitution effect whereby citizens realize an increased incentive to defect

imitators and optimizers in cournot oligopoly we analyze a symmetric n firm cournot oligopoly with a heterogeneous popu lation of optimizers and imitators imitators mimic the output decision of the most successful firms of the previous round a la vega redondo 1997 optimizers play a myopic best response to the opponents previous output firms are allowed to make mistakes and deviate from the decision rules with a small probability apply ing stochastic stability analysis we find that the long run distribution converges to a recurrent set of states in which imitators are better o than are optimizers this finding appears to be robust even when optimizers are more sophisticated it suggests that imitators drive optimizers out of the market contradicting a funda mental conjecture by friedman 1953

crime and social interactions the high variance of crime rates across time and space is one of the oldest puzzles in the social sciences this variance appears too high to be explained by changes in the exogenous costs and benefits of crime we present a model where social interactions create enough covariance across individuals to explain the high cross city variance of crime rates this model provides an index of social interactions which suggests that the amount of social interactions is highest in petty crimes moderate in more serious crimes and almost negligible in murder and rape

reforming china s institutional environment for urban infrastructure provision summary rapid urbanisation in the reform period has resulted in a very high demand for basic urban infrastructure in china improving its provision by the public sector is a challenge as problems persist in the form of unmet demand de ciencies in cost recovery and inadequate maintenance institutional hurdles particularly the lack of organisational and nancial autonomy for the providers of urban infrastructure are in part to blame urban construction authorities have yet to rid themselves of political interference and overlapping responsibilities but measures have been taken to reform the institutional environment speci cally increasingly decentralised central local scal relations are allowing municipalities an unprecedented degree of freedom for resource mobilisation through a wide range of mechanisms that greatly expand extra budgetary revenue a case study of shanghai s reform efforts shows that results can be immediate and promising

urban spatial development in the land policy reform era evidence from beijing this paper examines the characteristics of urban spatial development in beijing and identifies the extent to which these characteristics can be attributed to the emerging land market in beijing as

costly information and the evolution of self organization in a small complex economy abstract the core idea of evolution is that order in living systems emerges from a simple process of variation and selection in biological systems we usually understand the source of variation as best described by the mechanisms of genetics if human social systems are evolutionary systems however it would seem the variation that most explains the sources of change in these systems occurs not from a genetic mechanism but from individual learning we use an evolutionary computational methodology to explore the way individual learning and adaptation lead to the evolution of persistent self organized social and economic activity the basic idea behind these explorations is that the character and extent of self organizing social and economic activity depends upon the way the environment frames the costs of individual learning and adaptation we consider three different kinds of costs affecting learning and adaptation the costs of autonomous searching of communicating and of deciding individuals respond to these costs by carefully i e economically choosing to learn about and interact with familiar agents in familiar arenas in which they have relatively secure expectations about the outcome of their actions emerging from these choices are persistent relationships among agents that lead to social and economic structure and to the imperfect coordination of aggregate production the character and the extent of each are a function of the way the costs of information change with changing natural and human system conditions we use a learning classifier system lcs to model learning the logic of an lcs closely mimics the mechanisms of darwinian evolution but is applied to the evolution of an agent s decision rules we describe the environmental context necessary for an lcs to produce economizing behavior and apply the method to a multi agent simulation of the maine lobster fishery which we treat as a metaphor for competition based on the search for useful knowledge the structure and method of the model is similar to a conventional agent based model except we use lcs to evolve decision rules for each agent rather than supplying those rules ourselves this allows agents to change their behavior i e to learn and adapt as their environment changes modeling learning and adaptation as the source of behavioral variation makes it possible to use evolutionary theory to address important questions of social and economic emergence not possible with current methods

a transitional institution for the emerging land market in urban china chinese economic reforms since 1978 have been a continuous process of fundamental institutional change the new institution of ambiguous property rights over state owned urban land evolves from the

modes of economizing behavior experimental evidence abstract in addition to more or less elaborate explicity rational procedures economic choices in reality are frequently made by trial and error imitation following an authority habit thoughtless impulse and hunch presenting results from a number of experiments that explicity incorporate decision cost this paper explores the extent to which these alternative decision making modes can lead to optimal choices

economic development in shanghai and the role of the state this article examines the economic development process underlying shanghai s rapid urban transformation in the 1990s it analyses the key factors that have contributed to the economic development there and assesses critically the role of the state in this process it concludes that the sheer scale of investment and the national contexts rather than far sighted economic management at the local level are the keys to its economic success the article further argues that the prevailing views regarding the local state market relationship in shanghai need to be revised beneath the facade of a proactive and omnipotent state are numerous instances of failure and ineffectiveness moreover the market is much more than a tool in the state s decision making it is a growing force that the state is trying hard to control but with increasing difficulties

the institutional structure of a property market in inland china chongqing this paper contributes to the understanding of china s urban development by examining the institutional structure of a property market in an inland city chongqing data were collected from three recent projects through field reconnaissance and interviews a framework of institutional analysis was used in discussing and interpreting the data our analyses revealed an emerging property market with dynamic and evolving new institutions in inland china in this new market a variety of actors with different roles and interests in the property development process had come into play formal and informal rules governing the development process had been evolving although with a time lag the rapid formation of chongqing s property market was similar to that in the coastal cities nevertheless in contrast to the coastal cities this time lag led to a property market which was more dependent on state involvement chongqing s property market was dominated by government not only because the government formulated d

endogenous networks social games and evolution abstract this paper studies a social game where agents choose their partners as well as their actions players interact with direct and indirect neighbors in the endogenous network we show that the architecture of any nontrivial nash equilibrium is minimally connected and equilibrium actions approximate a symmetric equilibrium of the underlying game we apply the model to analyze stochastic stability in 2 2 coordination games we find that long run equilibrium selection depends on a trade off between efficiency and risk dominance due to the presence of scale effects arising from network externalities our results suggest a general pattern of equilibrium selection

a strategic model of social and economic networks we study the stability and efficiency of social and economic networks when self interested individuals can form or sever links first for two stylized models we characterize the stable and efficient networks there does not always exist a stable network that is efficient next we show that this tension persists generally to assure that there exists a stable network that is efficient one is forced to allocate resources to nodes that are not responsible for any of the production we characterize one such allocation rule the equal split rule and another rule that arises naturally from bargaining of the players

reflections on china s open policy towards foreign direct investment hayter r and han s s 1998 reflections on china s open policy towards foreign direct investment reg studies 32 1 16 china s open policy of kaifang zhengce assumes that foreign direct investment is an essential mechanism by which technological and other forms of know how regarding best practices can be transferred into the chinese economy yet this transfer cannot be assumed to the extent that the know how desired by china simultaneously defines the competitive advantage of multinational corporations kaifang zhengce is china s geopolitical strategy to resolve this paradox its key features involve combining an explicit spatial strategy within china and reliance on investment by overseas chinese especially firms based in hong kong yet these firms are not foreign as conventionally considered and their contribution to the modernization of china is greater than supposed hayter r et han s s 1998 des reflexions sur la politique d ouverture de la chine a l investissement etranger direct reg

imitators and optimizers in a changing environment abstract we analyze the repeated interaction between an imitating and a myopically optimizing player in an otherwise symmetric environment of changing marginal payoff focusing on finite irreducible environments and the case of strategic substitutes we unfold a trade off between the degree of interaction and the size of environmental shocks the optimizer outperforms the imitator if interaction is weak or shocks are large as to the case of duopoly this translates into small cross price elasticities or large shocks in marginal cost and or the maximum willingness to pay in these cases a changing environment creates selection pressure against imitative behavior

changing land policy and its impact on local growth the experience of the shenzhen special economic zone china in the 1980s having elaborated the transformation of land policy in the wake of chinese economic reform and the background to the formation of a new land policy in the shenzhen special economic zone china thi

shanghai between state and market in urban transformation economic liberalisation has brought fascinating changes to china s urban development by undermining state control and introducing market forces to economic decision making raising the fundamental

the political economy of the privatisation of the land market in shanghai this paper examines a land market in which the authority in china has a monopolistic power in the granting of the use rights of land to developers investors for real estate development purposes by granting land in private treaty mode rather than open market competition to the developers investors the chinese authority is actually distorting the land prices achieved in the emerging market which will subsequently lead to a distortion of normal land price behaviour despite the fact that the authority might have been underpricing land in shanghai they continue to sell land through the same private treaty mechanism one possible explanation for this is the deeply rooted ideology of the concept of cost as value while another is the possible political complications involved in the property rights of various invisible interests in land

on the formation of interaction networks in social coordination games there are many situations where two interacting individuals can benefit from coordinating their actions we examine the endogenous choice of partners in such social coordination games and the implications for resulting play we model the interaction pattern as a network where individuals periodically have the discretion to add or sever links to other players with such endogenous interaction patterns we see multiple stochastically stable states of play including some that involve play of equilibria in the coordination game that are neither efficient nor risk dominant thus the endogenous network structure not only has implications for the interaction pattern that emerges but it also has a significant impact on the play in the coordination game relative to what would arise if the same interaction network were exogenous