The Evolutionary Game of Poverty Traps

Edgar Javier Sanchez Carrera ()

Department of Economics University of Siena from Department of Economics, University of Siena

Abstract: We study an evolutionary game in which the individual behavior of the economic agents can lead the economy either into a low-level or a high-level equilibrium. The model represents two asymmetric populations, “leaders and followers”, where in each round an economic agent of population 1 is paired with a member of population 2. Our evolutionary game is a signaling game in which only the leader has private information. The leader moves first; the follower observes the leader's action, but not the leader's type, before choosing her own action. We found the equilibria both as self-confirming and evolutionarily stable strategies. Furthermore, considering an imitative behavior of the followers, we show that to overcome the poverty trap there exists a threshold value equals to the ratio "education costs-efficiency wages" of the number of high-profile economic agents

Keywords: Evolutionary games; imitation rule; poverty traps; replicator dynamics; signaling games; strategic complementarities (search for similar items in EconPapers)
JEL-codes: C70 C72 C73 I30 O10 O40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta, nep-evo and nep-gth
Date: 2009-02
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Persistent link: http://EconPapers.repec.org/RePEc:usi:wpaper:555

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