Imitation and evolutionary stability of poverty traps |
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Authors: | Edgar J Sánchez Carrera |
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Institution: | 1. Faculty of Economics, Autonomous University of San Luis Potosi, 78263, San Luis Potos?? SLP, Mexico 2. Department of Economics, University of Siena, 53100, Siena, Italy
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Abstract: | This paper develops a bioeconomic model applying evolutionary game theory to the notion of poverty traps. We study the evolution
of the social norm of being either a high-type or low-type in a dynamic environment where agents are driven by an imitative
behavior. History matters because given initial conditions, agents imitate according to their current success in payoffs and
the current profile of economic agents in the economy. We define a poverty trap as an evolutionarily stable strategic profile
and steady state of the replicator dynamics. We show that in poor economies with a large fraction of low-type agents imitative
strategies do not support a take-off into sustained growth. To achieve that take-off, society should subsidize critical parameters
of the expected payoffs such that economic agents may change the initial conditions and the economy gets a critical mass of
high-type economic agents, and so to overcome the poverty trap. |
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Keywords: | |
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