The arrival of the new

Luigi Marengo, Paolo Zeppini

Research output: Contribution to journalArticle

6 Citations (Scopus)
107 Downloads (Pure)

Abstract

In this work we present a number of urn models in which, contrary to standard Pólya urns, the number of competing alternatives is not given from the outset but may increase with the arrival of innovations. We begin by describing a variant of Pólya urns, first introduced by Fred Hoppe, in which balls of previously non-existing colors are added with some (declining) probability. We then propose new variants in which the probability of the arrival of new colors is itself subject to adaptive change depending on the success of past innovations and discuss applications to evolutionary models of technologies and industries. We numerically simulate different specifications of these urns with adaptively changing mutation rate and show that they can account for complex patterns of evolution in which periods of exploration and innovation are followed by periods in which the dynamics of the system is driven by selection among a stable set of alternatives.

Original languageEnglish
Pages (from-to)171-194
Number of pages24
JournalJournal of Evolutionary Economics
Volume26
Issue number1
Early online date8 Jan 2016
DOIs
Publication statusPublished - Mar 2016

Keywords

  • Adaptation and innovation
  • Increasing returns
  • Polya urns

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