Research

This article relates agents’ learning of a preference for a technology, competition of technologies, and their relative diffusion among potential adopters. Competitive interactions between two technologies are captured by an extended Lotka-Volterra model. To also incorporate preference learning on the part of potential adopters of these technologies, we combine it with a model of cultural learning based on role model, conformist, and hedonistic learning. Our theoretical analysis is illustrated by a concrete example: the competition between electric mobility and conventional forms of individual mobility. The model enables an evaluation of specific policy instruments as to the promotion of sustainable technology.

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.

This paper relates cultural distance and governance structures. We suggest a model of cultural evolution that captures the idiosyncratic socialization dynamics taking place in groups of communicating and interacting agents. Based on these processes, cultural distance within and between groups or organizational units develops. Transaction cost theorists associate higher cultural distance with higher transaction costs. Therefore, one problem of economic organization is assessing alternative governance structures in terms of the socialization dynamics they enable that entail different intraorganizational transaction costs. Socialization governance structures that can be used to affect cultural distance among employees include shared social experiences in groups, the assignment of influential role models, group sizes, the recruitment of employees presocialized in certain ways, the recognition of specific cultural dimensions such as “individualism” or “collectivism”, and the implementation of cooperative cultures in business units. These yield organizations differential capacities to adapt internal structures in transaction cost-minimizing ways.

Initially taking a theoretical stance, this paper relates firm-level processes and size distributions of firms at the industry level. An analytically tractable model explores how firm growth, exit, and spinoff activity in combination with systematically appearing growth crises in organizational development translate into specific firm size distributions (FSDs). Based on anthropological, social-psychological, and economic evidence on the effects of increasing group size on performance, the model features a critical organizational size that triggers growth crises. These processes generate size distributions of firms including different right-skewed distributions observed in the empirical literature and self-reinforcing spinoff processes that affect an industry’s FSD.

We offer a theory of spinoffs that explains some salient aspects of these important market entrants. In infant industries, a great share of new market opportunities is depleted by firms that spinoff from incumbents. A model emphasizing the relation between incumbents’ evolving corporate cultures and the generation of spinoffs explains this regularity in industry evolution. By doing so, we capture different patterns in firm development that finally will help explain the evolutionary paths that industries may follow. We show that organizations reach a critical size that entails the collapse of a cooperative culture and triggers the exodus of personnel founding own firms. Thereby, organizations with a cooperative culture active in a dynamic business environment provide ideal training grounds for potential founders. Moreover, we argue that cooperative firm cultures and processes of “entrepreneurial imprinting” are important sources of spinoffs’ superior capabilities concerning their later market performance. We relate our findings to empirical evidence on developmental patterns in industries, such as genealogies and performance of spinoffs.

This paper shows how cognitive human dispositions that take effect at the level of an individual firm’s corporate culture have repercussions on an industry’s evolution. In our theory, the latter is attributable to evolving corporate cultures coupled with changes in a firm’s business environment. With the help of a formal model of evolving corporate cultures, we demonstrate how firms can establish a cooperative cultural regime that yields competitive advantages in an innovative, fast changing environment. Depending on within-firm social learning processes and cognitive constraints of human agents, organizations then reach a critical cognitive firm size in their development beyond which the level of cooperation deteriorates rapidly—they systematically face a growth crisis. Organizations successful in such an environment and reaching a critical technological size may, however, reap economies of scale in a later, mature and stable business environment with altered corporate culture. Furthermore, we relate these findings to empirical evidence on firm survival and performance in different industries, the evolution of organizational structures, and technological advancements in production technologies, and we identify some determinants of market structures.

This paper relates firm size and opportunism by showing that, given certain behavioural 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.

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.

Since their emergence during the second half of the nineteenth century, Darwin inspired, instinct-based theories of human agency have delivered the psychological foundations of American Institutionalism. Consequently, at the beginning of the twentieth century, early institutionalists like Thorstein Veblen, Wesley Mitchell, John R. Commons and others employed instinct theory in their analysis of economic behavior and focused especially on the interaction between instinctive motivation and intentional economic action. By drawing on insights from contemporary research into the coevolutionary interaction of humans’ cognitive dispositions and their cultural environment, this paper revives the debate on the role of instincts in economics in general and in the analysis of corporate cultures in particular. As a result, some social instincts are identified and discussed that influence human behavior in an organizational context. A new perspective on the nature and development of corporate cultures is depicted that deviates from orthodox theories on the nature of the firm. Moreover, an instinct theory inspired by insights from cognitive science and other disciplines can contribute new aspects to debates on the nature of industrial relations and industrial reform, cooperation and creativity within corporations, and group-based learning processes – which all have been prominent topics of early institutionalism.

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.

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 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.

This paper discusses several explanatory approaches to economic phenomena – the concept of routines, Universal Darwinism, and the continuity hypothesis – that rely on concepts borrowed from biology. To emphasize the differences between these avenues, special attention is given to their dealing with the units and processes of selection in biological and economic evolution. Selectionist models analogous to phylogenetic biological evolution are prominent in many works in the field of evolutionary economics. Moreover, the relation of these approaches to Veblen’s own notions and demands with regards to the conversion of economics into an evolutionary science is highlighted. How fruitful is the introduction of explanatory models stemming from biology as analogies to economic theory development? How do evolutionary – Darwinian – thought and economic evolution relate? In answering these questions, this paper offers an interpretation of Veblenian thinking that deviates from existing receptions (also Cordes 2005 and 2007).

Decline and break-up of institutionalized cooperation, at all levels, has occurred frequently. Some of its concomitants, such as international migration, have become topical in the globalized world. Aspects of the phenomenon have also become known as failing states. However, the focus in most social sciences has been on institutional emergence and persistence, not collapse. We develop an endogenous explanation of collapsing institutions. Collapse may be an implication of the very economic success of institutionalized cooperation and of increasing system complexity, when cognitive conditions for effective collective decision-making do not proportionately evolve. Moreover, we show that collapse is not a simple logical reverse of emergence. Rather, institutions break up at different factor constellations than the ones prevailing at emergence. We approach endogenous institutional break-up and its asymmetry from various paradigmatic and disciplinary perspectives, employing psychology, anthropology, network analysis, and institutional economics. These perspectives cover individuals, groups, interaction-arenas, populations, and social networks.

Behavioral (e.g., consumption) patterns of boundedly rational agents can lead these agents into learning dynamics that appear to be ‘wasteful’ in terms of well-being or welfare. Within settings displaying preference endogeneity, it is however still unclear how to conceptualize well-being. This paper contributes to the discussion by suggesting a formal model of preference learning that can inform the construction of non-standard notions of dynamic well-being. Based on the assumption that interacting agents are subject to two biases that make them systematically prefer some cultural variants over others, we develop a procedural notion of well-being, based on the idea that policy should modify institutional conditions that generate dynamic instability in preference trajectories, while leaving individual choice sets unrestricted.

By relating Engel curves and social learning, we explain the existence of differently shaped Engel curves — an interesting phenomenon in the theory of demand. A formal approach to cultural learning within a population of consumers accounts for some cognitive foundations of these demand patterns. We find that a changing influence of an individual’s role models due to her increasing income, which entails new reference groups providing social identity, leads to the diffusion of new consumption behaviors. Thereby, the resulting Engel curves’ shape depends on the underlying learning dynamics. The approach contributes to an explanation of structural change and economic development.

The paper analyzes the ambiguous interplay of some human cognitive dispositions and competitive forces: (a) people have a want for a certain amount of novelty—potentially induced by competition-driven innovation—but emotionally resist an excessive degree of novel mental experiences; and (b) competition-driven change introduces challenges to agents that may result in fluid life states when skills and cognitive resources enable an individual to meet these challenges or in strained life states if this is not the case. As a result, some affective constraints to economic development and potential implications for economic theory development and policy making are identified.

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. Therefore, the biological and social bases of moral intuitions are explored. In this context, a key adaptation during evolution was the one that enabled humans to understand conspecifics as intentional agents. Since these behavioral aspects are considered to be an exaptation, they are not amenable to direct genetic explanations or to rationality-based approaches.

Given the significance of technology in the course of socio-economic evolution, the driving forces behind the continuous accretion of technological knowledge deserve particular attention. This paper suggests a hypothesis about the motivational underpinnings of human technological creativity that is able to explain some long-term developments in human labor and technology. These motivational underpinnings are considered to being similar across human beings. They can therefore be assumed to imply some commonly shared elements of human preferences or wants.

This paper is intended to reappraise Veblen’s theory of human nature and especially the psychological, biological, and cultural aspects of his instinct theory. According to Veblen, “[instincts] are the prime movers in human behaviour” (1914) and the starting point of his theory of institutional change. Veblen ascribed the origins of institutions to learned habits and ultimately to innate instincts, which provide a set of basic drives of human action, in the context of particular material conditions. Compared with instincts, which are directed toward a concrete objective end, habits are the means by which these ends can be reached and a flexible way of adapting to complexity.

During phylogeny, man adapted for culture in ways other primates did not. This key adaptation is the one that enabled humans to understand other individuals as intentional agents like the self. This genetic event opened the way for new and powerful cultural processes but did not specify the detailed outcomes of behavior we see today. It just provided the basis for cultural evolution that, with no further genetic events, enabled the distinctive characteristics of human cognition. These capabilities can explain the motivational underpinnings of a variety of human inclinations and behaviors, such as a tendency toward cooperation, altruism, or fairness.