Dimitry Rtischev

The phenomenon of young people (under 30) starting or working in ventures is common in Silicon Valley but rare in Japan. Avoiding cultural attributions upon which many international comparisons of entrepreneurship are truncated, we apply strategic behavior theory to uncover a rational-choice basis for this phenomenon. We identify individual and organizational players, consider their strategies, and compare equilibria in the institutional context of Japan and the US. We pay close attention to how competition in Japanese educational, labor, and marriage markets differs from such competition in the US to identify factors which raise the career attraction of big firms and thereby fuel adverse selection that hurts ventures. Our conclusions challenge the stereotype that the founders and employees of Silicon Valley ventures are heroic risk-takers whereas the Japanese are much more risk-averse.

Why are humans so vulnerable to pain in interpersonal relations and can so easily hurt others physically and emotionally? We theoretically examine whether being offensively strong but defensively weak can evolve as a strategic trait that fosters cooperation. We study a population comprised of "thick-skinned" and "thin-skinned" agents by using an indirect evolution model that combines rational choice in strategic interactions with evolutionary selection across generations. We find that (a) the relatively vulnerable and cooperative thin-skins cannot evolve under purely random matching, (b) with some assortment thin-skins evolve and can take over the entire population, (c) vulnerability to greater pain makes it easier for thin-skins to evolve, and (d) proximate pain which merely feels bad but does not lower fitness helps thin-skins evolve even more than pain which accurately reflects fitness consequences. We draw contrast with the Hawk-Dove model and identify several ways in which rationality hinders the evolution of the relatively vulnerable and peaceful type of agent.