perfect foresight and equilibrium selection in symmetric potential games the equilibrium selection approach of matsui and matsuyama j econ theory65 1995 415 434 which is based on rational players who maximize their discounted future payoff is analyzed for symmetric two player games with a potential function it is shown that the maximizer of the potential function is the unique state that is absorbing and globally accessible for small discount rates journal of economic literatureclassification number c72

aspiration adaptation in the ultimatum minigame abstract two agents recurrently play a 2 2 version of the ultimatum game each player sticks to his past action if it was satisfactory relative to an endogenous aspiration level and otherwise abandons it with positive probability this type of satisficing behavior is shown to yield efficiency in the limit it does not favor a specific distribution of surplus and can give an explanation for the incidence of equitable offers in practice numerical investigations link a player s character as captured by the model parameters to his average bargaining success results indicate that it is beneficial to be persistent and stubborn i e slow in adapting aspirations and switching actions in response to major dissatisfaction also it is an advantage to be capricious i e to experience large and frequent perturbations of aspiration level and to discriminate only little between minor and major dissatisfaction

unobserved heterogeneity in stochastic cost frontier models this paper applies a number of stochastic cost frontier models to a panel data set and compares their ability to distinguish unobserved heterogeneity from inefficiency variation among firms the main focus is on greene s 2005 panel data model that incorporates firm specific effects in a stochastic frontier framework in cases where the unobserved heterogeneity is correlated with explanatory variables while the random effects estimators can be biased the fixed effects model may overestimate inefficiency in line with mundlak a simple method is proposed to include such correlations in random effects specification the sample includes 36 swiss nursing homes operating from 1993 to 2001 the results suggest that the proposed specification can avoid the inconsistency problem while keeping the inefficiency estimates unaffected

measurement of economic efficiency in pakistani agriculture farm efficiency and the question of how to measure it is an important subject in developing countries agriculture there are three distinct approaches to measurement based on cost profits and production functions farrell developed the concept of technical efficiency based on input and output relationships technical inefficiency arises when actual or observed output from a given input mix is less than the maximum possible allocative inefficiency arises when the input mix is not consistent with cost minimization advances have been made in the frontier cost function literature using flexible functional forms bauer greene 1980 forsund knoxlovell and schmidt and schmidt an approach using systems of equations based on cost profit and distance functions was developed to incorporate all available information on multiproduct farms kumbhakar schmidt fare grosskopf and nelson hayes the present study uses a cost function approach and combines the concepts of technical and allocative efficiency in the cost relationship any errors in the production decision translate into higher costs for the producer at the same time the stochastic nature of production implies that the theoretical cost function is stochastic 2 two distinct approaches are used first we use the stochastic frontier approach in which translog cost function is specified and estimated without using share equations the derived measure of inefficiency is then related to socioeconomic demographic and farm size variables second we use a behavioral approach in which translog cost function again is estimated but this time as a function of the shadow prices of the inputs the cost share equations are estimated jointly with a cost equation incorporating all cross equation restrictions moreover the input use inefficiency is introduced through the parameters and these are related to the structural variables this approach permits us to obtain a farm specific measure of allocative inefficiency

cooperation through imitation abstract this paper characterizes long run outcomes for broad classes of symmetric games when players select actions on the basis of average historical performance received wisdom suggests that when agent s interests are partially opposed behavior is excessively competitive keeping up with the jones lowers everyones welfare here we study the long run consequences of imitative behavior when agents have sufficiently long memories and evaluate past actions in terms of weighted average payoff imitation robustly leads to cooperative outcomes with highest symmetric payoffs in the long run furthermore lengthening memory reinforces this effect this provides a rationale for example for collusive cartel like behavior without collusive intent

technical efficiency of french nuclear energy plants this article analyses the efficiency of french nuclear energy plants belonging to edf electricity of france from 2004 to 2008 with a dea data envelopment analysis model the convexity model is used to investigate the technical efficiency of a representative sample of nuclear plants the results indicated that some plants have undergone an improvement in technical efficiency while others have regressed in terms of technical efficiency policy implications related to the results are discussed

long run equilibria with dominated strategies abstract we show that the predictions of long run behavior under the evolutionary process are highly sensitive to the addition and elimination of strictly dominated strategies in particular for the best response dynamics cf kandori m rob r 1995 evolution of equilibria in the long run a general theory and applications j econ theory 65 2 383 414 we prove that for any symmetric normal form game any strict nash equilibrium can be selected as the unique long run equilibrium by appropriately adding only one single strategy which is strictly dominated by all original strategies moreover if we further assume instantaneous adjustment then any convex combination of strict nash equilibria with rational number weights can be realized as the long run distribution by appropriately adding strictly dominated strategies

zombie lending and depressed restructuring in japan this paper explores the role that misdirected bank lending played in prolonging the japanese macroeconomic stagnation that began in the early 1990s the investigation focuses on the wide spread practice of japanese banks of continuing to lend to otherwise insolvent firms we docu ment the prevalence of this forbearance lending and show its distorting effects on healthy firms that were competing with the impaired firms the paper by hoshi 2000 was the first to call attention to this phenomenon and its ramifi

rapid evolution under inertia abstract this paper demonstrates that inertia driven by switching costs leads to more rapid evolution in a class of games that includes m m pure coordination games under the best response dynamic and a fixed rate of mutation the expected waiting time to reach long run equilibrium is of lower order in the presence of switching costs due to the creation of new absorbing states that allow ellison s ellison g 2000 basins of attraction long run stochastic stability and the speed of step by step evolution rev econ stud 67 17 45 step by step evolution to occur

technical and scale efficiencies of meat goat farms in the usa abstractthis study determines i scale and technical efficiencies ii marginal productive contributions for inputs and outputs and iii efficiency drivers of meat goat farms in the usa we estimate an input distance function idf using a stochastic production frontier spf technique the average technical efficiency te for the usa meat goat whole farm was 0 74 the operator education level percentage of annual net farm income from the goat operation regional differences and holding of an off farm job are the efficiency drivers of usa meat goat farms we find increasing returns to scale rts for usa meat goat farms our results suggest that usa meat goat farms can be scale efficient if their optimal size of operation is greater than approximately 64 goats or greater than 40 breeding does empirical monte carlo mc simulation techniques show the consistency of finite sample properties for the input distance function

technical efficiency of us dairy farms and federal government programs in this article technical efficiency te of dairy farms is estimated and analysed with two methodologies data envelopment analysis dea and stochastic frontier analysis sfa using dea the te scores for different states are determined further logistic regression is applied to te scores to explain how known technical and policy variables affect a farm s probability of being efficient the second methodology employs sfa to estimate and analyse te scores two federal milk policies are considered in this research marketing policy and milk income loss policy federal milk marketing program has shown a significant and negative impact on te with both methods payments under the milk income loss program have shown a positive significant impact in sfa analysis both methodologies produced similar outcomes on regional impacts and on the significance of several considered variables categorical representation of some variables in graphs provided some additional insights of their effects on te

survival at the center the stability of minimum differentiation abstract we model a hotelling market with multidimensional product differentiation in an evolutionary framework both evolutionary stability in the sense of schaffer 1989 and stochastic stability following kandori et al 1993 young 1993 are analyzed it is shown that firms move towards the center in product space i e a principle of minimum differentiation on all dimensions of the product space applies

popularity of reinforcement based and belief based learning models an evolutionary approach in an evolutionary model players from a given population meet randomly in pairs each instant to play a coordination game at each instant the learning model used is determined via some replicator dynamics that respects payoff fitness we allow for two such models a belief based best response model that uses a costly predictor and a costless reinforcement based one this generates dynamics over the choice of learning models and the consequent choices of endogenous variables we report conditions under which the long run outcomes are efficient or inefficient and they support the exclusive use of either of the models or their co existence

imitating cooperation and the formation of long term relationships we propose that the option to maintain or to quit relationships can enforce cooperation in the prisoner s dilemma between boundedly rational agents in a large population if players imitate successful behavior and sometimes choose to experiment agents do not have the ability to follow history dependent strategies but have access to information about what behavior is on average the most successful one cooperative behavior in a homogenous population emerges if both the imitation and experimentation rate are suciently small in a heterogeneous population the same holds without a restriction on the imitation rate the results resemble eshel et al 1998 but the assumption of local interaction is substituted by the endogenous formation of relationships

systematic departures from the frontier a framework for the analysis of firm inefficiency departures from a production or cost frontier may reflect the systematic effect of conditions that contribute to inefficiency to test whether some portion of frontier function departures can be systematically explained the frontier inefficiency error component is modeled as a function of various causal factors and a random component the functional form of the inefficiency error term model is chosen to assure strict one sidedness preliminary empirical results generated from electric utility data suggest the superiority of including both systematic and random components in the inefficiency error term

interaction and imitation with heterogeneous agents a misleading evolutionary equilibrium abstract in a two population evolutionary game we analyze the interaction between individuals belonging to two populations with the same strategy set but different payoffs a game is played among individuals in the two populations they imitate agents belonging to the same and also the alternative population when a revising agent is matched with someone in the alternative population who plays differently his expected payoff and the observed payoff of his partner diverge hence he conjectures the payoff from switching to the other strategy by weighing what he expected and what he observes the evolutionary dynamics has a unique locally asymptotically stable fixed point which typically differs from the evolutionary stable equilibrium without inter population imitation for a collective action game we analyze to what extent the compliance rate and the social welfare differ from the nash equilibrium and how these gaps depend on the confidence that agents assign to what they see

binary games with state dependent stochastic choice this paper studies a stochastic equilibrium selection model for binary coordination games players switch strategies stochastically so that the mistake probabilities are fully dependent on the population states a probabilistic behavior is said to be aspiration imitation resp oriented if strategy switches are mainly driven by the aspiration imitation resp effect in general a strategy switch by one player generates externalities on others strategies in a coordination game can be classified according to the relative magnitude of their externality effects it is shown that the selection outcome for a linear coordination game is determined in a specific way by the balance of the risk dominance the aspiration imitation and the externality effects it is also shown that an aspiration imitation resp oriented behavior tends to select payoff dominant maxmin resp equilibrium and that risk dominant equilibrium is always selected if and only if the aspiration and the imitation effects exactly cancel each other out which in turn makes the selection process insensitive to externality effects journal of economic literature classification number c72

allocative and scale efficiency among maize farmers in zambia a zero efficiency stochastic frontier approach the commonly used stochastic frontier model assumes that all firms are inefficient in this specification inefficiency is non negative and the probability of inefficiency being exactly zero is al

do people play nash equilibrium lessons from evolutionary game theory evolutionary game theory provides an answer to two of the central questions in economic modeling when is it reasonable to assume that people are rational and when is it reasonable to assume that behavior is part of a nash equilibrium and if it is reasonable which equilibrium the traditional answers are not compelling and much of evolutionary modeling is motivated by the need for a better answer evolutionary game theory suggests that in a range of settings agents do eventually play a nash equilibrium moreover evolutionary modeling has shed light on the relative plausibility of different nash equilibria

a brave new world kantian nashian interaction and the dynamics of global climate change mitigation abstract we model game theoretic situations in which agents motivated by kantian ethics interact with conventional nashian agents we define the concept of generalized kant nash equilibrium which encompasses the nash equilibrium the kantian equilibrium and the kant nash equilibrium as special cases we show the existence and uniqueness of a kant nash equilibrium in a static game of climate change mitigation and derive its properties in a dynamic setting we analyze a differential game of climate change mitigation in the presence of both types of agents and compare their markov emission strategies for both the static model and the dynamic model as the population share of kantians increases the quality of the environment improves and both types of agents are better off

total factor productivity growth in local enterprise partnership regions in britain 1997 2008 harris r and moffat j total factor productivity growth in local enterprise partnership regions in britain 1997 2008 regional studies this paper decomposes aggregate total factor productivity tfp growth in britain for 1997 2008 to show the contribution of different local enterprise partnerships leps as well as manufacturing and services and uk and foreign owned plants within leps these contributions are further decomposed to show the role of productivity growth in continuing plants vis a vis reallocations in output shares the results show that the largest leps in population terms with higher levels of job density a greater reliance on manufacturing more skilled and better qualified workers and a lower turnover of businesses achieved the highest tfp growth this is mostly the result of reallocations of output shares towards high productivity plants

nash equilibrium and the evolution of preferences abstract a population of players is randomly matched to play a normal form game g the payoffs in this game represent the fitness associated with the various outcomes each individual has preferences over the outcomes of the game and chooses an optimal action with respect to those preferences however these preferences need not coincide with the fitness payoffs when evolution selects individuals on the basis of the fitness of the actions they take the distribution of aggregate play must be a nash equilibrium of g weak additional assumptions on the evolutionary process imply perfect equilibrium journal of economic literature classification number c72

evolution of preferences1 we endogenize preferences using the indirect evolutionary approach individuals are randomly matched to play a two person game individual subjective preferences determine their behaviour and may differ from the actual objective pay offs that determine fitness matched individuals may observe the opponents preferences perfectly not at all or with some in between probability when preferences are observable a stable outcome must be efficient when they are not observable a stable outcome must be a nash equilibrium and all strict equilibria are stable we show that for pure strategy outcomes these conclusions are robust to allowing almost perfect and almost no observability with the notable exception that inefficient strict equilibria may fail to be stable with any arbitrarily small degree of observability despite being stable with no observability

migration and technical efficiency in cereal production evidence from burkina faso this article uses a double bootstrap procedure and survey data from burkina faso in a two stage estimation to explore ways in which continental and intercontinental migration determine efficiency in cereal production of rural households findings suggest that continental migration has a positive relation and intercontinental migration no relation with technical efficiency for continental migrant households migration has removed surplus male labor a cause for inefficiency in production intercontinental migration leads to a gender imbalance in the household which cannot be compensated for by investments in farm equipment the failure of intercontinental migration to transform cereal production from traditional to modern is attributed to an imperfect market environment

plant closure in britain since the great recession one of the suggested explanations for the uk productivity puzzle is that since the onset of the great recession low productivity plants that would normally have closed have continued operating this paper therefore investigates whether there has been a change in the relationship between productivity and closure since the recession we find that for a number of sectors the negative association between tfp and closure that existed prior to the recession has been offset or even reversed since the recession

evolution of preferences we endogenize preferences using the indirect evolutionary approach individuals are randomly matched to play a two person game individual subjective preferences determine their behaviour and may differ from the actual objective pay offs that determine fitness matched individuals may observe the opponents preferences perfectly not at all or with some in between probability when preferences are observable a stable outcome must be efficient when they are not observable a stable outcome must be a nash equilibrium and all strict equilibria are stable we show that for pure strategy outcomes these conclusions are robust to allowing almost perfect and almost no observability with the notable exception that inefficient strict equilibria may fail to be stable with any arbitrarily small degree of observability despite being stable with no observability

imitation and the evolution of walrasian behavior theoretically fragile but behaviorally robust a well known result by vega redondo implies that in symmetric cournot oligopoly imitation leads to the walrasian outcome where price equals marginal cost in this paper we show that this result is not robust to the slightest asymmetry in fixed costs instead of obtaining the walrasian outcome as unique prediction every outcome where agents choose identical actions will be played some fraction of the time in the long run we then conduct experiments to check this fragility we obtain that contrary to the theoretical prediction the walrasian outcome is still a good predictor of behavior

a generalized production frontier approach for estimating determinants of inefficiency in u s dairy farms this article investigates farm level efficiency of u s dairy farmers by estimating their technical and allocative efficiency technical inefficiency is assumed to be composed of a deterministic component that is a function of some farm specific characteristics and a random component by doing this we extend the stochastic frontier methodology in which determinants of technicial inefficiency are explicitly introduced in the model given the inputs variations in efficiency of farms are then explained by both deterministic and random components of technical inefficiency the empirical results indicate that a levels of education of the farmer are important factors determining technical inefficiency and b large farms are more efficient technically than small and medium sized farms both technical and allocative inefficiency are found to decrease with increase in the level of education of the farmer

what can wages and employment tell us about the uk s productivity puzzle as in many european countries labour productivity in the uk has been stagnant since the start of the great recession this article uses individual data on employment and wages to try to understand whether real wage flexibility can help shed light on the uk s productivity puzzle it finds perhaps unsurprisingly that workforce composition cannot explain the reduction in wages and hence productivity that we observe even compared to previous recessions instead real wages have fallen significantly within jobs this time round why one possibility we investigate is that the labour supply in the uk is higher compared to previous recessions

smallholder technical efficiency controlling for environmental production conditions abstract smallholder agricultural production depends heavily on environmental production conditions that are largely exogenously determined yet few data sets collect necessary detailed information on environmental production conditions this oversight raises the spectre of likely omitted variables bias because farmers input choices typically respond in part to environmental conditions moreover because environmental production conditions are rarely symmetrically distributed the omission also generally leads to upward bias in estimated technical inefficiency and to biased estimates of the correlates of estimated technical inefficiency as well using panel data from 464 traditional rice plots in cote d ivoire we show that controlling for heterogeneous environmental production conditions significantly changes inferences perhaps especially with respect to smallholder rice farmers estimated technical inefficiency

effects of technological change and institutional reform on production growth in chinese agriculture recent rapid agricultural production growth in chinese agriculture could be attributed to an increase in inputs technological change and institutional reform an accounting approach was used to separate the relative contribution of these three factors institutional change like the introduction of the household production responsibility system has contributed to past growth in production however technological change is crucial to furthering production growth because of the limited potential for significant increase in the use of conventional inputs in particular land continued institutional change must accompany corresponding technological changes

disparities in the financial performance of agricultural entities according to the legal form the case of slovakia abstractfinancial management in agricultural enterprises is affected by a range of factors that are not present in other sectors one of the factors that affect the performance of enterprises is th

neighbors and extension agents in ethiopia who matters more for technology adoption improving agricultural productivity is seen as vital to economic growth in poor countries particularly in sub saharan africa where productivity growth has lagged behind that of other continents the focus has therefore been on new technologies particularly the adoption and diffusion of improved seed varieties and the increased use of fertiliser supported by investments in effective extension services it is important to understand how these new technologies spread and the effectiveness of extension services in this process

altruists egoists and hooligans in a local interaction model the authors study a population of agents each of whom can be an altruist or an egoist altruism is a strictly dominated strategy agents choose their actions by imitating others who earn high payoffs interactions between agents are local so that each agent affects and is affected by only his neighbors altruists can survive in such a world if they are grouped together so that the benefits of altruism are enjoyed primarily by other altruists who then earn relatively high payoffs and are imitated altruists continue to survive in the presence of mutations that continually introduce egoists into the population copyright 1998 by american economic association

evolution to equilibrium in an asymmetric oligopoly with differentiated goods abstract we present results on finite population evolutionarily stable strategies esss and stochastically stable states for a model of evolution with an imitative rule of strategy choice in an asymmetric oligopoly with differentiated goods and two groups of firms one group of low cost firms and one of high cost firms the firms play price setting and quantity setting oligopoly games under linear demand functions we will show that the stochastically stable state in a price setting oligopoly and that in a quantity setting oligopoly coincide

the evolution of strategic behaviour this paper is a selective survey of recent work on evolutionary models of games it is shown how evolution in a literal biological sense may have generated the attitudes to risk that are the basis of strategic behavior such attitudes to risk may or may not conform to the expected utility theorem although strategic behavior itself is bound to be importantly influenced by nongenetic mechanisms these mechanisms may remain analogous to biological inheritance at least in special cases the theory of evolutionary games derived in this way is sketched and applications to various coordination games are discussed

evolution in games with endogenous mistake probabilities abstract j bergin and b lipman econometrica 64 1996 943 956 show that the selection effect from the random mutations in the adaptive population dynamics in m kandori g mailath and r rob econometrica 61 1993 29 56 and p young econometrica 61 1993 57 84 is due to restrictions on how these mutation rates vary across population states we here model mutation rates as endogenously determined mistake probabilities by assuming that players with some effort can control the probability of implementing the intended strategy this is shown to corroborate the results in kandori mailath rob 1993 and under certain regularity conditions those in young 1993 journal of economic literature classification number c72

the impact of trade openness on technical efficiency in the agricultural sector of the european union the aim of this study is to analyse the impact of trade openness on technical efficiency of the european union s eu agricultural sector there are no systematic theories linking trade policy to technical efficiency hence the relation between trade liberalization and technical efficiency is fundamentally ambiguous stochastic frontier analysis is used to model the relationship between eu s production resources and agricultural output as well as the importance of trade openness on technical efficiency of a country the data for 16 of the 28 eu members were available for the period 1980 2007 including land capital fertilizer labour agricultural gdp foreign direct investments fdi exports and import data results indicate that trade openness has an immediate negative impact on efficiency in the eu agricultural sector over time however trade openness does increase efficiency the fdi outflows increase efficiency this suggests that an initial reduction in capital supply forces eu nations to uti

do all countries grow alike abstract this paper investigates the driving forces of output change in 77 countries during the period 1970 2000 a flexible modeling strategy is adopted that accounts for i the inefficient use of resources and ii different production technologies across countries the proposed model can identify technical efficiency and input change for each of three endogenously determined regimes membership in these regimes is estimated rather than determined ex ante this framework enables explorations into the determinants of output growth and convergence issues in each regime

homo moralis preference evolution under incomplete information and assortative matching what preferences will prevail in a society of rational individuals when preference evolution is driven by the resulting payoffs we show that when individuals preferences are their private information a convex combination of selfishness and morality stands out as evolutionarily stable we call individuals with such preferences homo moralis a t one end of the spectrum is homo oeconomicus who acts so as to maximize his or her own payoff at the opposite end is homo kantiensis who does what would be the right thing to do in terms of payoffs if all others would do likewise we show that the stable degree of morality the weight placed on the moral goal is determined by the degree of assortativity in the process whereby individuals are matched to interact

rule evolution and equilibrium selection abstract this paper studies rule evolution and its effect on selection between strict equilibria two rules are investigated the myopic best response and naive imitation if agents cannot change rules equilibrium selection is determined by the relative frequency of agents using the two rules when agents can only change rules through mutation the efficient equilibrium weakly dominates the risk dominant one if agents can change rules by updating then the efficient equilibrium strictly dominates the risk dominant one journal of economic literature classification numbers c72 c73 d81

efficient equilibrium selection in evolutionary games with random matching abstract this paper investigates the sensitivity of recent evolutionary models of learning to the specification of the matching mechanism we study a literally random matching mechanism combined with a process of strategy adjustment based on the realized average performance of each strategy in the key class of symmetric 2 2 coordination games the pareto efficient equilibrium per se is selected rather than the risk dominant equilibrium as the probability of experimentation or mutation goes to zero furthermore convergence to the equilibrium is relatively fast we extend these results for example to games of common interest journal of economic literature classification numbers c72 c73

homogeneity restrictions on the translog cost model a note benston hanweck and humphrey bhh 1 first applied the translog cost model to empirical analyses of depository institutions cost characteristics subsequent studies by benston berger hanweck and humphrey bbhh 2 murray and white 7 gilligan and smirlock 4 and gilligan smirlock and marshall gsm 5 have employed this type of flexible form cost function as a regularity condition the translog cost model should be linearly homogenous in all input prices that is given the following translog cost function