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Of pride and prejudice: agent learning under sticky and persistent stereotype

Journal of economic interaction and coordination, 2021-04, Vol.16 (2), p.381-410

The Author(s) 2020 ;The Author(s) 2020. This work is published under http://creativecommons.org/licenses/by/4.0/ (the “License”). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License. ;ISSN: 1860-711X ;EISSN: 1860-7128 ;DOI: 10.1007/s11403-020-00307-0

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  • Title:
    Of pride and prejudice: agent learning under sticky and persistent stereotype
  • Author: Blind, Georg D. ; Lottanti von Mandach, Stefania
  • Subjects: Adaptation ; Computer Appl. in Social and Behavioral Sciences ; Economic Theory/Quantitative Economics/Mathematical Methods ; Economics ; Economics and Finance ; Finance ; Mathematical and Computational Physics ; Regular Article ; Theoretical
  • Is Part Of: Journal of economic interaction and coordination, 2021-04, Vol.16 (2), p.381-410
  • Description: Stereotypes matter for economic interaction if counterparty utility is informed by factors other than price. Stereotyped agents may engage in efforts to counter stereotype by adapting to in-group standards. We present a model informing the optimal extent of these efforts depending on an agent’s (a) share of total transactions between out- and in-group agents; and (b) share of repeated transaction pairings with in-group counterparties. Low values of (a) suppress the effect of adaptation efforts on the stereotype itself ( persistence ). In turn, low values of (b) mean that out-group agents cannot dissociate from stereotype ( stickiness ). Significantly, the model implies that the optimum level of effort may require adaptation beyond in-group standards, and that such over-adaptation attains maximum likelihood in cases where stereotype is sticky and persistent at the same time. We test our model with data on private equity buyout investments conducted in Japan between 1998 and 2015 by domestic Japanese and Anglo-Saxon funds. We document that the latter not only adapt, but eventually over-adapt. In addition, we show that their efforts are effective in reducing a premium initially asked by domestic counterparties.
  • Publisher: Berlin/Heidelberg: Springer Berlin Heidelberg
  • Language: English
  • Identifier: ISSN: 1860-711X
    EISSN: 1860-7128
    DOI: 10.1007/s11403-020-00307-0
  • Source: Springer OA刊
    ProQuest Central
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