Endogenous Time Preferences in Social Networks

'Peter Ordeshook is an outstanding scholar and is addressing a very important question. As he points out on the first page of Chapter 1, social norms do exist and are adhered to, constitutions survive, people cooperate with others in some settings, but not in others. The topic of this book is very exciting and important - this is a real winner.'- Elinor Ostrom, Indiana University, US Marianna Klochko and Peter Ordeshook address an under-studied issue from rational choice theory - the common assumption that individual time preferences are exogenous and fixed. They then present empirical evidence to suggest that this is not the case, exploring a computer simulation model that allows for the evolutionary change of time preferences. This is done, moreover, in the context of social networks that are themselves endogenously determined. Beginning with the observation that individual time preferences are endogenous to social context, the authors develop a computer simulation of endogenous time preferences in social networks, the structure of which are themselves allowed to be endogenous. The core conclusion offered, aside from demonstrating the inter-relationship between time preference and network structure, is to show how social complexity can arise from even simple linear structures - a degree of complexity unlikely to be describable with close form analytic models. This volume, moreover, is an application of evolutionary game theory to our understanding of dynamic social processes. Economists concerned with networks, information, behavioral processes and evolutionary games, political scientists and sociologists interested in social networks, and students in all of these disciplines will find this illuminating book a welcome addition to their libraries.