View by Day

Prof. Juan Camilo Cárdenas

Universidad de los Andes, Bogotá, Colombia
________________________________________

Abstract:      When individuals face social dilemmas such as in the case of common-pool resources, there is a need for designing incentives and institutions that promote cooperation and reduce free riding. Promoting competition between individuals may sound counterproductive since getting ahead of others within a group implies taking advantage of others who are cooperating.

     However, promoting competition between groups may induce members of a team to work collectively to get ahead of other groups for collective survival. Prof. Cárdenas will present results of experimental studies in the laboratory in which individuals had clear incentives to free ride in which competing against other groups could represent an extra bonus for those groups performing better than other groups, and a penalty if the group drops in the ranking. However, incentives such that free riding is still more profitable at the individual level is maintained.

     The results suggest an overall improvement in social efficiency which may provide some lessons regarding the design of incentives and institutions in situations in which different teams, communities, neighborhoods can engage in healthy and transparent competing environments and where the overall well-being depends on the levels of cooperation across groups.

The seminar will be based on the following two papers:

Between-group competition, intra-group cooperation and relative performance
(Juan C. Cárdenas and César Mantilla)

Between-group competition enhances cooperation in resource appropriation games
(Juan Camilo Cárdenas, Santiago Gómez, and César Mantilla)
________________________________________

Cosmin Ilut, Ph.D.

Duke University, Durham, North Carolina, USA

________________________________________

Authors: Cosmin Ilut and Rosen Valchev

Abstract: We develop a tractable model of limited cognitive perception of the optimal policy function. Agents allocate cognitively costly reasoning effort to generate signals about the optimal action conditional on the observed objective state. Accumulated signals update beliefs about the entire function, but mostly about the optimal action conditional on states close to the realizations where reasoning occurred. Agents reason more when observing unusual states, producing state- and history-dependent responses akin to salient thinking. The typical individual and aggregate actions exhibit non-linearity, endogenous persistence and volatility clustering. Individual behavior also displays stochastic choice, biases in systematic behavior, and cross-sectional volatility clusters.
________________________________________

Full Text: “Economic Agents as Imperfect Problem Solvers”