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Full-Text Articles in Social and Behavioral Sciences
When Good Bankers Go Bad: Is Moral Hazard Evolutionarily Stable?, Atin Basuchoudhary, Troy Siemers, Sam Allen
When Good Bankers Go Bad: Is Moral Hazard Evolutionarily Stable?, Atin Basuchoudhary, Troy Siemers, Sam Allen
Atin Basu Choudhary
We apply existing theory as a preliminary analysis of whether efficient contracts can evolve naturally. Any banker could belong to one of two cultures – patient and impatient. We suggest that the interaction of patient bankers with other patient bankers is a critical element in the success of efficient contracts while the interaction of impatient bankers with other impatient bankers leads to the spread of moral hazard in the banking system. We show that the success (or failure) of efficient contracts depends on the initial proportion of bankers who are part of the patient culture. We further show that regulatory …
The Evolution Of Revolution: Is Splintering Inevitable?, Atin Basu Choudhary, Laura Razzolini
The Evolution Of Revolution: Is Splintering Inevitable?, Atin Basu Choudhary, Laura Razzolini
Atin Basu Choudhary
We use an evolutionary model to study splintering in rebels’ groups. We assume that rebels possess cultural traits that encourage cooperation, defection (splintering) or some sort of trigger behavior like Tit-For-Tat. We characterize the dynamic process through which the rebels’ discount rate determines whether splintering will occur in the population, even when cooperation is efficient. Contrary to the usual Folk Theorem prediction, we show that, even when rebels are extremely patient, cooperation may not evolve if the initial distribution of cultures in the population is not favorable. Thus, political actions by the states or governments that make rebels impatient may …