Homogeneous middleman groups as superorganisms,endogamous ethnic groups,and trust networks: Reply to comments on Janet Landa’s target article, ‘The bioeconomics of homogeneous middleman groups as adaptive units’

This article responds to some of the very valuable comments on my target article (Landa, J Bioeconomics 10(3):259–278, 2008) on homogeneous middleman groups (HMGs) as adaptive units. In addition to viewing HMGs as adaptive units, I discuss the idea of viewing HMGs as superorganisms and as endogamous ethnic groups, as well as re-emphasizing the importance of HMGs as trust networks. My theory of HMGs as adaptive units shares some similarities with biologists’ ‘biological market theory’ of mutualistic interactions between species.      

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.     

Is group selection necessary? An alternative interpretation of homogeneous Middleman groups: Comments on Janet Landa’s paper

This article critiques the efforts by Janet Landa, David Sloan Wilson and others to use group selection paradigms to explain the success of homogenous middlemen groups (HMGs). It argues that group selection theory cannot explain the conflicts of interests that arise within HMGs or why they dissolve in certain occasions. Landa’s earlier explanations, which stressed the combination of genetic (kinship) and social bonds in the creation of trust and cooperation in the extension of credit and the creation of local public goods, better predicts both the strength and weaknesses of HMGs.      

The nature and units of social selection

On the basis of the technical definition of selection developed by George Price (1995), we describe two forms of selection that commonly occur at the social level, subset selection and generative selection. Both forms of selection are abstract and general, and therefore also incomplete; both leave aside the question of explaining the selection criterion and why entities possess stable traits. However, an important difference between the two kinds of selection is that generative selection can accommodate an explanation of how new variation is created, while subset selection cannot. An evolutionary process involving repeated cycles of generative selection can, in principle, continue indefinitely because imperfect replication generates new variation along the way, whereas subset selection reduces variation and eventually grinds to a halt. Even if the two kinds of selection are very different, they share a number of features. First, neither subset selection nor generative selection implies improvement: neither kind of selection necessarily leads to efficiency or implies systematic outcomes. Second, both subset selection and generative selection can lead to extremely rapid effects in a social population. Third, in the social domain, both generative selection and subset selection involve choice and preference in some way: neither form of selection necessarily excludes intentionality. In concluding the article, we single out a challenge for future research in identifying the role of various units of culture in selection processes and the multiple levels at which social selection processes take place.     

Computing open-loop noncooperative solution in discrete dynamic games

The purpose of this paper is to introduce a new algorithm for the approximation of non-quadratic, non-linear open-loop Nash Cournot equilibrium in a difference game of fixed duration (multiperiod) and initial state. The algorithm based on adaptive search procedure called genetic algorithm has been used to optimize strategies for N-person dynamic games. Since genetic algorithms require little knowledge of the problem itself, computations based on these algorithms are very attractive to complex dynamic optimization problems. The empirical evidences are also provided to show the success of the algorithm developed. A typical example in US macroeconomic policy selection for 1933-1936 yields evidence of political inference in the economy.     

A group selection perspective on economic behavior, institutions and organizations

This article examines the role of group dynamics and interactions in explaining economic behavior and the evolution of institutions. Our starting point is the large literature on group selection in the biological, behavioral and social sciences. We present a range of interpretations of group selection, describe a complete set of group selection mechanisms, and discuss the empirical and experimental evidence for group selection. Unique features of cultural group selection are investigated, and opportunities for applying the latter to various areas of economic theory and economic policy are identified.     

成交风险、交易成本、逆向选择风险与投资者订单选择

本文利用多元对教条件自田归计数模型讨论了交易概率、交易成本以及选择成本等市场微观结构因素对中国证券市场投资者订单选择的影响.实证研究发现:(1)交易成本的增加会削弱投贵者递交指令的积极性,当成交风险较大时,投资者更偏好市价订单;(2)由于中国证券市场订单类型较为单一,逆向选择风险对投资者订单选择行为并无显著性的影响;(3)在同质信息的驱动下不同类型订单之间具有显著的持续和交叉相关性.     

Testing for unemployment hysteresis in nonlinear heterogeneous panels: International evidence

Nonlinear behavior of unemployment is well documented in the literature, and thus linear unit root tests may not be appropriate in this case. This paper tests for hysteresis of unemployment for 29 OECD countries through the use of a new nonlinear panel unit root test developed by Ucar and Omay (2009). The test examines the joint null hypothesis of linearity and a unit root against the alternative hypothesis of nonlinear stationarity. Large power gains are achieved by both combining cross-sectional information with nonlinearities in the data. In addition, after the unit root null being rejected, we use a sequential panel selection method suggested by Chortareas and Kapetanios (2009) to classify the whole panel into a group of stationary countries and a group of non-stationary countries. The empirical findings show that the nonlinear panel test gives strong evidence in favor of the natural rate hypothesis of unemployment for 23 of 29 OECD countries, in contrast to those obtained by Chang's (2002) linear panel test that 17 countries display evidence of stationary unemployment.     

Institutionalized pollution havens

A multiple-principal, multiple-agent lobby group model suggests that the effect of foreign direct investment (FDI) on environmental policies is conditional on the structure of host countries' political institutions such as the number of legislative units (veto players). The model also yields the novel concept of “aggregate honesty” which combines veto players and corruption. FDI raises environmental policy stringency where the number of legislative units are many (aggregate honesty is high), but reduces it where the legislative units are few (aggregate honesty is low). Our panel data evidence is fully consistent with these predictions. An additional contribution is to show the empirical importance of endogenizing environmental policy in Pollution Haven Hypothesis studies. Only when treated as endogenous does environmental policy have a significant negative effect on FDI.     

Hayek Reads the Literature on the Emergence of Norms

Hayek’s approach to cultural and institutional evolution has been frequently criticized because it is explicitly based on the controversial notion of (cultural) group selection. In this paper this criticism is rejected on the basis of recent works on biological and cultural evolution. The paper’s main contention is that Hayek employed group selection as a tool for the explanation of selection among several equilibria, and not as a vehicle for the emergence of out of equilibrium behavior (i.e., altruism). The paper shows that Hayek’s ideas foreshadowed some of the most promising developments in the current literature on the emergence of norms. JEL Classification: B31, B41     

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.      

跨国公司行业选择与地点选择战略的相关性

行业选择和地点选择分别是跨国公司进入战略的主要论题,但现有研究缺少对两者之间是否存在相关性的分析。本文以中国FDI的“引进来”部分（IFDI）和“走出去”部分（OFDI）为倒,分析中国作为东道国引进外资时和其作为母国对外投资时在行业选择上的差异;并考虑地点选择因素,研究“走出去”的中国企业在发达国家和发展中国家的行业选择上是否存在差异,以及在中国投资的发达国家和发展中国家在行业选择上是否存在区别。通过跟踪200家外商来华投资企业和40家中国对外投资企业（118个项目）的投资产业、母国和东道国信息,运用描述统计和卡方检验得出实证结论：外商来华投资和中国对外投资在行业选择和地点选择上都存在差别;发达国家和发展中国家在华投资行业的技术含量有显著不同,即跨国公司的行业选择与地点选择存在相关性;但中国企业在对外投资中受资源寻求动机的强烈影响,其到发达国家和发展中国家进行投资时在行业选择上没有体现出差异性。     

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.     

The Bioeconomics of Cooperation

When transactions and information are costly and exchange is non-simultaneous, ‘institutions matter’. They matter because exchange under these circumstances subjects the participants to potentially harmful behaviors by other participants, among which are: opportunistic behavior, agency, the free-rider problem, cheating, moral hazard, and adverse selection. Institutions constrain these behaviors, allowing the participants to take advantage of the gains from trade and specialization, and thereby facilitating cooperation. Individuals adhere to institutional rules because they gain by doing so. Because the individual gains are inseparable from the structure of the institutions, the institutions themselves necessarily become the focus of the analysis—as we see in the new institutional economics (NIE). The new group selection position in biology involves a similar shift in focus from the level of the individual to the group when studying the evolution of altruism. But some of the proponents of group selection go further, arguing that altruism in biology evolves because it is in the interest of the group, but not the individual. In fact, group level analysis is necessary in biology, as in the NIE, because it allows for the discovery of ‘institutions’ that constrain cheating, opportunistic behavior, etc., thereby making participation in the group in the long-run self-interest of the individual. This revised version was published online in August 2006 with corrections to the Cover Date.     

Technology diffusion and environmental regulation: the adoption of natural gas-fired combined cycle generating units

Even though environmental policy can affect the path of technology diffusion, the economics literature contains limited empirical evidence of this relationship. This paper provides insight into the technology adoption decisions of electric generating firms. Specifically, the diffusion of combined cycle (CC) generating units is examined. This technology is ‘environmentally friendly’ in that, it is cleaner and more efficient than alternative generating units. The empirical model explores the decision to adopt a CC generating unit and the extent to which the technology is adopted in response to environmental regulations imposed on producers. Zero-inflated models are used to evaluate adoption decisions at the plant-level as well as the firm-level. This research shows that environmental regulation has a significant effect on technology choice and the extent of adoption in this industry. Findings suggest that the stringency of regulations that control the building of new generating units is particularly influential for established power plants.     

Why multilevel selection matters

In spite of its checkered intellectual history, and in spite of the myriad proposals of alternative models that claim both to account for the range of human behavior and to dispense with the need for selection above the organism level, a multilevel selection framework allowing for biological as well as cultural group selection remains the only coherent means of accounting for the persistence and spread of behavioral inclinations which, at least upon first appearance at low frequency, would have been biologically altruistic. This argument is advanced on three tracks: through a review of experimental and observational evidence inconsistent with a narrow version of rational choice theory, through a critique of models or explanations purporting to account for prosocial behavior through other means, and via elaboration of the mechanisms, plausibility, and intellectual history of biological group selection.      

Book Reviews

Abstract

This paper argues that exchange rate models rooted in the theory of Purchasing Power Parity (PPP) and balanced trade are fundamentally mis-specified, as evidenced by the disjuncture between: (1) the empirical evidence, which largely refutes PPP; and (2) the empirical result that ‘real’ productivity shocks are associated with observed secular trends in exchange rates. In the former case we have a theory without convincing evidence, and in the latter case we have empirical evidence in want of a consistent theory. If looked at from the perspective of a ‘cost of production’ theory of prices, such empirical results might not be so theoretically anomalous. So-called ‘real’ variables (especially productivity and unit labor costs), let in through the side door as ‘shocks’ to PPP equilibrium, may in fact be part and parcel of the formation of prices of production on an international scale through capitalist competition. The primary conclusion is that the empirical evidence supports a cost of production theory of the terms of trade and the real exchange rate. The empirical evidence in support of the Balassa–Samuelson model of the exchange rate is re-interpreted in this light. In this interpretation, parity holds only in terms of rates of return on investment which, in the classical tradition, are presumed to equalize across industries internationally.     

Diversification strategies and firm performance in Vietnam

This paper is based upon the assumption that a firm's profitability is determined by its degree of diversification which is, in turn, strongly related to the antecedent decision to carry out diversification activities. This calls for an empirical approach that permits the joint analysis of the three interrelated and consecutive stages of the overall diversification process: diversification decision, degree of diversification and outcome of diversification. We apply parametric and semi‐parametric approaches to control for sample selection and the endogeneity of the diversification decision in both static and dynamic models. For the analysis, we use the census dataset on the whole firm population in Vietnam, as a representative of transition countries. After controlling for industry fixed‐effects, the empirical evidence from the firm‐level data shows that diversification has a curvilinear effect on profitability: it improves firms’ profit up to a point, after which a further increase in diversification is associated with declining performance. This implies that firms should consider optimal levels of product diversification when they expand their product offerings beyond their core business. Other noteworthy findings include the following: (i) the factors that stimulate firms to diversify do not necessarily encourage them to extend their diversification strategy; (ii) firms that are endowed with highly technological resources and innovation investment are likely to successfully exploit diversification as an engine of growth; and (iii) while industry performance does not have a strong influence on the profitability of firms, it impacts their diversification decision as well as the degree of diversification.     

Finance–Growth Nexus and the P‐bias: Evidence from OECD Countries

Recent studies provide new empirical evidence confirming that financial development is linked to economic growth in OECD countries. Using new dynamic panel regression techniques, these appraisals indicate that within the group of high‐income countries stock market size as a measure of financial advancement contributes significantly to overall economic activity. Applying the same advanced techniques, this paper questions this conclusion by showing that the findings of these studies seem to be not only not robust with respect to adding new observations but also likely to be plagued by a severe price bias which belittles the information content of the used financial indicator (stock market capitalization). We provide evidence that anticipative price effects (i.e. expectations of future growth, reflected in current stock prices) may be driving the statistical relationship between stock market activities and economic growth in high‐income countries to a much larger extent than recent analyses of the finance– growth link in OECD countries suggest .     

Foreign patent rights and high-tech exports: evidence from Taiwan

This paper conducts a consecutive pooled data analysis from 1989 to 2000 to investigate the relationship between foreign patent rights (FPRs) and the exports of three high-tech industries in Taiwan: the semiconductor, the information and the communication equipment industries. Following Smith's model setup, empirical results indicate that both market expansion and market power effects do exist in Taiwan's case. In addition, this paper proposes a new hypothesis in which the importing country may exhibit a stronger R&D ability than the exporting country, a case that has not been considered in earlier empirical work. Finally, a test is made to determine if a TRIPS (Trade-related Intellectual Property Rights) agreement has any impact on the FPRs–exports relationship, and no evidence is found of a structural change after the implementation of TRIPS.