The evolutionary psychology of economics

Paul H Rubin and C. Monica Capra

in Applied Evolutionary Psychology

Published in print November 2011 | ISBN: 9780199586073
Published online January 2012 | e-ISBN: 9780191731358 | DOI:
The evolutionary psychology of economics

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In this chapter, we argue that applying evolutionary psychology to economics can explain observed ‘anomalies’ in decision-making. We provide an analysis of the relationships between economics and the evolutionary and biological origin of economic choice, focusing on some selected topics that are of special interest to us. These are: (1) rationality and biases, especially as related to the endowment effect, (2) the extent to which individuals are selfish or pro-social, (3) individuality versus heterogeneity, and (4) perceptions of economics. We discuss examples of how evolutionary psychology can explain anomalous behaviour including violations to rational choice, such as the status quo bias. Evolved mechanisms can also explain the curious persistence of pro-social behaviour in one-shot anonymous interactions, and the observed heterogeneity of agent types. Finally, we argue that the perception of economics is also affected by evolved mechanisms from pre-modern times. We believe that more explicit attention to the evolutionary bases of economic behaviour would lead to real advances in economic theory.

Keywords: evolutionary economics; optimality theory; bounded rationality; endowment effect; reciprocal altruism

Chapter.  5095 words. 

Subjects: Psychology

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