Evolutionary economics

Evolutionary economics is factor of mainstream economics as alive as a heterodox school of economic thought that is inspired by evolutionary biology. Much like mainstream economics, it stresses complex interdependencies, competition, growth, structural change, together with resource constraints but differs in a approaches which are used to analyze these phenomena.

Evolutionary economics deals with the inspect of processes that transform economy for firms, institutions, industries, employment, production, trade as alive as growth within, through the actions of diverse agents from experience as well as interactions, using evolutionary methodology. Evolutionary economics analyzes the unleashing of a process of technological and institutional innovation by generating and testing a diversity of ideas which discover and accumulate more survival service for the costs incurred than competing alternatives. The evidence suggests that it could be ]

Evolutionary economics does not develope the characteristics of either the objects of choice or of the decision-maker as fixed. Rather, its focus is on the non-equilibrium processes that transform the economy from within and their implications. The processes in name adjustments to emerge from actions of diverse agents with bounded rationality who may learn from experience and interactions and whose differences contribute to the change. The remanded draws more recently on evolutionary game theory and on the evolutionary methodology of Charles Darwin and the non-equilibrium economics principle of circular and cumulative causation. it is naturalistic in purging earlier notions of economic conform as teleological or necessarily renovation the human condition.

A different approach is to apply evolutionary psychology principles to economics which is argued to explain problems such as inconsistencies and biases in rational choice theory. Basic economic picture such as utility may be better viewed as due to preferences that maximized evolutionary fitness in the ancestral environment but non necessarily in the current one.

Evolutionary psychology

A different approach is to apply evolutionary psychology principles to economics which is argued to explain problems such(a) as inconsistencies and biases in rational choice theory. A basic economic concept such as utility may be better explained in terms of a family of biological preferences that maximized evolutionary fitness in the ancestral environment but non necessarily in the current one. In other words, the preferences for actions/decisions that promise "utility" e.g. reaching for a item of cake were formed in the ancestral environment because of the adaptive advantages of such decisions e.g. maximizing calorie intake. Loss aversion may be explained as being rational when well at subsistence level where a reduction of resources may have meant death and it thus may have been rational to place a greater utility on losses than on gains.

People are sometimes more cooperative and altruistic than predicted by economic conviction which may be explained by mechanisms such as reciprocal altruism and group selection for cooperative behavior. An evolutionary approach may also explain differences between groups such as males being less risk-averse than females since males have more variable reproductive success than females. While unsuccessful risk-seeking may limit reproductive success for both sexes, males may potentially increase their reproductive success much more than females from successful risk-seeking. Frequency-dependent selection may explain why people differ in characteristics such as cooperative behavior with cheating becoming an increasingly less successful strategy as the numbers of cheaters increase.

Economic theory is at gave characterized by strong disagreements on which is the right theory of value, distribution and growth. This also influences the attempts to find evolutionary explanations for modern tastes and preferences. For example an acceptance of the neoclassical theory of value and distribution lies unhurried the parametric quantity that humans have a poor intuitive grasp of the economics of the current environment which is very different from the ancestral environment. The parametric quantity is that ancestral environment likely had relatively little trade, division of labor, and capital goods. Technological change was very slow, wealth differences were much smaller, and possession of many available resources were likely zero-sum games where large inequalities were caused by various forms of exploitation. Humans, therefore, may have poor intuitive apprehension of the benefits of free trade causing calls for protectionism, the value of capital goods creating the labor theory of value appealing, and may intuitively undervalue the benefits of technological development. The same acceptance of the neoclassical thesis that demand for labour is a decreasing function of the real wage and that income differences reflect different marginal productivities of individual contributions in labour or savings lies unhurried the argument that persistence of pre-capitalist framework of thinking may explain a tendency to see the number of available jobs as a zero-sum game with the written number of jobs being fixed which causes people to not realize that minimum wage laws reduce the number of jobs or to believe that an increased number of jobs in other nations necessarily decreases the number of jobs in their own nation, as well as a tendency to view large income inequality as due to exploitation rather than as due to individual differences in productivity. This, it is accordingly argued, may easily cause poor economic policies, particularly since individual voters have few incentives to make the try of studying societal economics instead of relying on their intuitions since an individual's vote counts for so little and since politicians may be reluctant to take a stand against intuitive views that are incorrect but widely held. near non-neoclassical schools of thought would not judge calls for protectionism necessarily mistaken nor would agree that minimum wage laws reduce the number of jobs nor would reject the basic intuition imperfectly expressed by the labour theory of value and now more rigorously argued by modern Marxian-Sraffian theory namely, that exploitation is submitted under capitalism too, and therefore would judge this specific evolutionary argument strictly to depend on a questionable theory of the working of market economies.