Demonstrating group selection: A comment on Janet Landa’s ‘The bioeconomics of homogenous middleman groups as adaptive units’

Janet Landa provides an impressive historical tour of the development of her theory of homogeneous middlemen groups (HMGs), and how she arrived at the group selection approach. Despite her claim that the case studies she presents provide evidence for group selection in human societies, we argue that such a conclusion is premature. We suggest that an evolutionary explanation of HGMs will be strengthened by greater attention to the details of the selective process.     

The bioeconomics of homogeneous middleman groups as adaptive units: Theory and empirical evidence viewed from a group selection framework

The paper presents a bioeconomics theory of homogeneous middleman groups (HMGs) as adaptive units as well as empirical evidence in the form of a number of historical case studies of HMGs functioning as adaptive units in less-developed economies lacking infrastructure. The evidence presented is not new: most of the case studies have been published [Landa (in Jenkins (Ed.) The informal sector: Including the excluded, 1988)]. What is new, however, is analyzing the phenomena of HMGs in a new way—as adaptive units viewed from a group selection perspective. In doing so, the case studies in this paper present empirical evidence of the existence and importance of group selection in human society. Target paper.     

The origin of utility: Sexual selection and conspicuous consumption

This paper proposes an explanation for the universal human desire for increasing consumption and the associated propensity to trade survival opportunity off conspicuous consumption. I argue that this desire was moulded in evolutionary times by a mechanism known to biologists as sexual selection, whereby an observable trait – conspicuous consumption in this case – is used by members of one sex to signal their unobservable characteristics valuable to members of the opposite sex. It then shows that the standard economics problem of utility maximisation is formally equivalent to the standard biology problem of the maximisation of individual fitness, the ability to pass genes to future generations, and thus establishes a rigorous theoretical foundation for including conspicuous consumption in the utility function.     

Rank-order tournaments and selection

Rank-order tournaments are often presented as devices for aligning incentives in a principal-agent setting. In most of this literature agents are expected to be identical so that the principal is indifferent ex ante as to who wins the contest, implying that the selection properties of the tournament can be ignored. In this paper we consider a tournament which is not necessarily symmetric, and in which agent type is private information. The principal cares about who wins, but the basic tournament will not achieve perfect selection; the lower-type agent may sometimes win. In a two-player tournament we present a simple reward system in which the winner's reward depends upon which (if any) of two “test standards” is passed; conditions are presented under which this system allows the principal to choose the best agent. This system can be extended in a simple manner to rank types in ann-player tournament. We suggest that the theory can be applied to internal labor markets and research contests.     

The politics of redistributive social insurance

This paper analyses the political support for a social insurance that includes elements of redistribution when there exists an imperfect private insurance alternative. Individuals differ both in their income and risk. The social insurance is compulsory and charges an income-related contribution with pooling of risks. The private insurance is voluntary and charges a contribution based on individual risks. However due to the adverse selection problem, private insurance companies provide only partial insurance. Adopting a non-expected utility model, we show that there is a general majority support for social insurance and that this support is increasing with risk aversion. We also show that a mixed insurance is politically impossible, regardless of the degree of redistribution of social insurance and the joint distribution of risk and income in the population. Lastly, we analyse how the political support for social insurance is affected by any change in its redistributive component and the possibility of using genetic tests.     

The effects of bureaucracy on political accountability and electoral selection

This paper examines how bureaucracy affects political accountability and electoral selection, using a three-tier political agency model consisting of voters, politicians and bureaucrats. In the model’s hierarchy, politicians are constrained by elections while bureaucrats are controlled by budgets. If voters and bureaucrats prefer different types of politicians (i.e. they have a conflict of interests), incumbents pass oversized budgets to prevent bureaucrats from engaging in strategic behaviours that damage incumbents’ reputations. If, instead, voters and bureaucrats prefer the same type of politicians (i.e. they have an alignment of interests), bureaucrats cannot obtain a concession from politicians. In the latter case, however, bureaucrats send voters a credible signal regarding an incumbent’s type, which improves electoral selection. This paper also shows that political appointment systems improve political accountability in the conflict-of-interests case while they weaken electoral selection in the alignment-of-interests case.     

Convergent cultural evolution and multilevel selection: Reply to comments on Janet Landa’s ‘The bioeconomics of homogenous middleman groups as adaptive units: Theory and empirical evidence viewed from a group selection framework’

The comments on Janet Landa’s (J Bioecon 10(3):259–278, 2008) target article provide a fascinating snapshot of how multilevel selection theory is perceived across several disciplines. When we focus on the zone of agreement among the commentators, Landa’s article provides an important example of convergent cultural evolution. When we focus on the zone of disagreement, we find a snapshot of the current status of the group selection controversy that goes beyond narrow scientific issues and requires a ‘truth and reconciliation’ process to resolve, as discussed in my series of blogs titled “Truth and Reconciliation for Group Selection” (Wilson , 2009) and briefly summarized here.      

Estimating gravity equation models in the presence of sample selection and heteroscedasticity

Gravity models are widely used to explain patterns of trade. However, two stylized features of trade data, sample selection and heteroscedasticity challenge the estimation of gravity models. We propose a two-step method of moments (TS-MM) estimator that deals with both issues. The Monte-Carlo experiments show that the TS-MM estimates are resistant to various combinations of sample selection and heteroscedasticity. Moreover, the TS-MM estimator performs reasonably well even when the data generating process deviates from the TS-MM assumptions. We revisit the world trade in 1990 to illustrate the usefulness of the proposed model, with emphasis on the identification of the extensive margin of trade.     

Religiosity and social trust: evidence from Canada

Using the latest wave of the Canadian Ethnic Diversity Survey, I investigate whether religious identity and religious intensity associate with the degree to which people trust others, controlling for a wide range of characteristics. The analysis shows that Canadian Roman Catholics are appreciably less trusting than mainline Protestants, and religious nones are situated in between these two groups. With regard to religious intensity, I find that higher commitment negatively correlates with trust in unknown others for Roman Catholics. The reverse is true for Protestants. Results also show stark cross-denominational variations within Protestantism, as two highly committed denominations of Mennonite and Pentecostal are found to be the most and the least trusting religious groups in Canada. No non-Christian religious minority is found statistically significantly less trusting than Canadian Roman Catholics. Considering particularized trust in one’s neighbours and co-workers yields comparable conclusions.     

Reputation for quality and adverse selection

We analyze a dynamic market with a seller who can make a one-time investment that affects the returns of tradable assets. The potential buyers of the assets cannot observe the seller׳s investment prior to the trade or verify it in any way after the trade. The market faces two types of inefficiency: the ex-ante inefficiency, i.e., the seller׳s moral hazard problem, and the ex-post inefficiency, i.e., inefficient ex-post allocations due to the adverse selection problem. We analyze how the observability of information by future buyers, through which the seller builds a reputation, affects the two types of inefficiency as well as the interplay between them.     

The nature and implications of a process conception of rationality based on social learning

Even while acknowledging the autonomy of “laws” specific to economics, theology situates the view of economics as a “means-ends” science of human choices within an unavoidable overarching moral order. After all, economic life is merely part of a much larger personal quest for happiness. Thus, the efficient selection of means for particular ends necessarily takes place within the context of objective standards of economic rights and obligations as part of human nature. The teleological perspectives of theology add much to our understanding of economic life by providing the warrants for these rights and obligations.     

Waiting times and equilibrium selection

Summary. This paper shows how graphs can be used to calculate waiting times in models of equilibrium selection. It also shows how reducing the state space can simplify the calculations of both waiting times and selected equilibria. The results are applied to potential games and games with strategic complementarities.Received: 31 December 2002, Revised: 25 October 2003, JEL Classification Numbers: C72, C73.Alan Beggs: I am grateful to an anonymous referee for helpful comments.     

The subversive nature of inequality: Subjective inequality perceptions and attitudes to social inequality

This paper shows that higher levels of perceived wage inequality are associated with a weaker (stronger) belief into meritocratic (non-meritocratic) principles as being important in determining individual wages. This finding is further corroborated using various complementary measures of individuals’ perception of the chances and risks associated with an unequal distribution of economic resources, such as their perception of the chances of upward mobility. I finally show that those individuals perceiving a high level of wage inequality also tend to be more supportive of redistributive policies and progressive taxation. Taken together, these findings suggest that high levels of perceived wage inequality do have the potential to undermine the legitimacy of market outcomes.     

Entry,growth, and survival: The new learning on firm selection and industry evolution

This paper tries to shed some light on the seeming paradox posed by the findings in the industrial organization literature that (1) the bulk of firms in an industry are not only very small, but also sufficiently small so that they are operating at a sub-optimal scale of output, and (2) entrepreneurs are apparently not deterred from starting new firms even in industries where scale economies play an important role. A dynamic view of the process of firm selection and industry evolution is that new firms typically start at a very smal scale of output. Because this level of output may be sub-optimal, the firm must grow in order to survive. The empirical evidence supports such a dynamic view of the evolutionary nature of industries. Viewed through a dynamic lens, the often-observed asymmetric size distribution of firms becomes more understandable. The persistence of an asymmetric firm-size distribution skewed towards small enterprises presumably reflects a continuing process of entry into industries and not necessarily the survival of such small and suboptimal enterprises over a long period of time.     

一般均衡理论的价值基础

现代西方主流经济学中的一般均衡理论缺乏应有的价值基础。近年来试图建立马克思主义的一般均衡理论的努力也一直未能成功。然而,根据马克思的劳动价值论可以证明,在假定社会总产品的价格总量等于价值总量、平均利润总量等于剩余价值总量的条件下,必然有且仅有一个恰好等于相应价值向量的一般均衡价格向量。这意味着,一般均衡理论完全可以建立在劳动价值论的基础之上。本文首先根据马克思关于两大部类社会总产品构成的理论,建立包括技术关系在内的价值体系和相应的价格体系,其次说明在价格体系中存在有无穷多的一般均衡价格向量,最后从无穷多的一般均衡价格向量中确定一个"标准"的价格向量,并证明这个标准价格向量必然等于相应的价值向量。     

Income maximization and the selection and sorting of international migrants

Two prominent features of international labor movements are that the more educated are more likely to emigrate (positive selection) and more educated migrants are more likely to settle in destination countries with high rewards to skill (positive sorting). Using data on emigrant stocks by schooling level and source country in OECD destinations, we find that a simple model of income maximization can account for both phenomena. Results on selection show that migrants for a source-destination pair are more educated relative to non-migrants the larger is the absolute skill-related difference in earnings between the destination country and the source. Results on sorting indicate that the relative stock of more educated migrants in a destination is increasing in the absolute earnings difference between high and low-skilled workers. We use our framework to compare alternative specifications of international migration, estimate the magnitude of migration costs by source-destination pair, and assess the contribution of wage differences to how migrants sort themselves across destination countries.     

Collusion and group lending with adverse selection

In an environment with correlated returns, this paper characterizes optimal lending contracts when the bank faces adverse selection and borrowers have limited liability. Group lending contracts are shown to be dominated by revelation mechanisms which do not use the ex post observability of the partners' performances. However, when collusion between borrowers under complete information is allowed, group lending contracts are optimal in the class of simple revelation mechanisms (which elicit only the borrower's own private information) and remain useful with extended revelation mechanisms.     

Stability and equilibrium selection in a link formation game

In this paper we study a static link formation game under consent that has multiple Nash equilibria. In the literature, the use of coalitional refinements has been the standard approach to select among equilibria. Alternatively, based on the Global Games theory, a non cooperative equilibrium selection approach is proposed, so as to select those Nash equilibria that are robust to the introduction of incomplete information. Interestingly, the equilibrium selected is unique and it is in conflict with those predicted by the commonly used coalitional refinements. Furthermore, a conflict is found between stability and efficiency even when no such conflict exists with the coalitional refinements. We are especially grateful to Deborah Minehart, Roger Lagunoff, Daniel Vincent, Peter Cramton, Luca Anderlini, Axel Anderson, Felipe Zurita, Francis Bloch, Colin Stewart, the editor and three anonymous referees for their valuable comments that contributed to improve the paper. We also thank participants at the EEA-ESEM, Stockholm 2003, the IUSC conference, Columbia University 2003, and the Workshop on Global Games, SUNY, Stony Brook, 2007.     

Insurance contracts with imprecise probabilities and adverse selection

Summary. This article deals with optimal insurance contracts in the framework of imprecise probabilities and adverse selection. Agents differ not only in the objective risk they face but also in the perception of risk. In monopoly, a range of configurations that VNM preferences preclude appears: a pooling contract may be optimal, incomplete coverage may be offered to high risks, low risks may be better covered.Received: 1 November 2001, Revised: 15 April 2003, JEL Classification Numbers: D81, D82, G22.Useful suggestions by Emmanuelle Auriol, Bernard Bensaïd, Michéle Cohen, Isaac Meilijson and the anonymous referee are acknowledged. Correspondence to: M. Jeleva