Group Selection and the Limits to Altruism

Several evolutionary mechanisms have been identified in the literature that would generate altruism in humans. The most powerful (except for kin selection) and most controversial is group selection, as recently analyzed by Sober & D.S. Wilson. I do not take a stand on the issue of the existence of group selection. Instead, I examine the level of human altruism that could exist if group selection were an engine of human evolution. For the Sober & Wilson mechanism to work, groups practicing altruism must grow faster than other groups. I call altruistic behavior that would lead to faster growth efficient altruism. This often consists of cooperation in a prisoner's dilemma. ltruistic acts such as helping a temporarily hungry or injured person would qualify as efficient altruism. Efficient altruism would also require monitoring recipients to avoid shirking. Utilitarianism would be an ethical system consistent with efficient altruism, but Marxism or the Rawlsian system would not. Discussions of efficient altruism also help understand intuitions about fairness. We perceive those behaviors as fair that are consistent with efficient altruism. It is important to understand that, even if humans are selected to be altruistic, the forms of altruism that might exist must be carefully considered and ircumscribed.     

Trade and Renewable Resources in a Second Best World: An Overview

We provide an overview and introduction to the emerging field of trade and renewable resources, and discuss the potential impact of trade liberalization on welfare and resource conservation. A key factor determining the effect of trade reform is the institutional context or property rights regime, and our survey is organized such that it loosely follows the development of new insights with respect to institutions in this literature. This implies a transition from the benevolent planners model to the polar opposite benchmark of open access in the 1990s. Currently the pendulum is swinging back towards management and regulation, but institutions are treated as endogenous. We discuss and compare various key models in some detail and search for common ground between protagonists and antagonists of free trade. Paper based on Keynote address by Erwin Bulte, 12th Annual Conference of the European Association of Environmental and Resource Economists, Bilbao (Spain), June 28–30, 2003.     

Antidumping duties, undertakings, and foreign direct investment in the EU

We study the effects of EU antidumping policy when foreign firms can ‘jump’ antidumping duties through foreign direct investment (FDI) in the EU. We show that duty jumping or duty pre-empting FDI occurs if the EU administration has broader objectives than protecting EU industry's profitability and if cost advantages of foreign firms are transferable abroad. The (expectation of) price undertakings reduces the incentives to engage in FDI and may even discourage FDI as long as products are not too differentiated. The results are consistent with recent empirical findings on antidumping jumping FDI.     

Auctions for PURPA purchases: A simulation study

Competition was introduced into the electric utility industry with the passage of the Public Utilities Regulatory Policy Act (PURPA) of 1978. Increasing interest has appeared in structuring the PURPA purchase market into an auction system. This paper addresses the design issues associated with setting up such markets and introduces a simulation model to study them. The simulation analysis is guided by theoretical issues such as the alleged inefficiency of first-price auctions. We find that efficiency concerns raised about first-price auctions turn out to be less important than simple theoretical concerns would suggest.     

Individual bidder behavior in first-price private value auctions

Individual bid functions display sensitivity to the strategic considerations inherent in first-price auctions. However, several formal models, including heterogeneous Nash equilibrium bidding models with constant relative risk aversion, perform quite poorly.     

Approximate tâtonnement processes

Summary We introduce a probabilistic model for price adjustment in an exchange economy which approximates the classical Walras tâtonnement process while avoiding many of its unrealistic features. The model is decentralized in that the trades permitted to an agent and the resulting price changes depend only on the commodity vector currently held by that agent, and not on the commodity vectors held by the other agents in the economy. Our results will show that the Walras tâtonnement process can be decentralized without changing its behavior on the macroeconomic scale. Our model has a finite set of commodities, a market maker who adjusts prices, and a large finite set of agents who trade only with the market maker. Each agent has a demand function depending on his commodity vector and the price vector. At each discrete time, one agent is chosen at random and exchanges his current commodity vector for his demand vector. Then the market maker adjusts the price vector by an amount which depends on the selected agent's commodity vector and the current price. Prices are adjusted rapidly enough to avoid prolonged trading at the wrong price, but slowly enough so that a substantial price change will depend on a significant simple of agents. The main result shows that with probability arbitrarily close to one the price will rapidly approach and then remain close to an equilibrium value, following a path which is close to the price path of the corresponding tâtonnement process.