One of the core building blocks of traditional economic theory is the concept of equilibrium, a state of the world in which economic forces are balanced and in the absence of external influences the values of economic variables remain static. Many traditional equilibrium models, or equilibria,...

This paper uses an evolutionary approach to explain the origin of money as media of exchange in a primitive economy, where agents specialize in production for the purpose of trading for their own consumption goods. A general class of dynamics, which is consistent with Darwinian dynamics, is...

Profit maximization is the usual prerequisite for achievement of a perfectly competitive equilibrium. However, for a long time it has been thought that this principle of profit maximization can be replaced by natural selection. This paper shows analytically that with the market selection...

This article begins by proposing a random taste parameterization of a quadratic extension of the PIGLOG demand system at the household level, which is consistent with exact aggregation. This variation in tastes is a random function of household characteristics. The econometric implication is...

Chapter 1 Introduction -- Chapter 2 Conservatism bias and asset price overreaction or underreaction to new information in a competitive securities market -- Chapter 3 Conservatism bias and asset price overreaction or underreaction to new information in the presence of strategic interaction --...

Recent research has proposed several ways in which overconfident traders can persist in competition with rational traders. This paper offers an additional reason: overconfident traders do better than purely rational traders at exploiting mispricing caused by liquidity or noise traders. We...

This paper builds an evolutionary model of an industry where firms produce differentiated products. Firms have different average cost functions and different demand functions. Firms are assumed to be totally irrational in the sense that firms enter the industry regardless of the existence of...

Purpose: The purpose of this paper is to examine the long-run survival of earnings fixated traders. Design/methodology/approach: This paper builds a theoretical model of a competitive securities market where both rational traders and earnings fixated traders receive an informational signal...

Even when participants know very little about their environment, the market itself, by serving as a selection process of information, promotes an efficient aggregate outcome. To emphasize the role of the market and the importance of natural selection rather than the strategic actions of...