1

Han et. al.,2021 mentioned

In particular, the evolutionary predominance of investors who adopt active strategies provides a social explanation for anomalies such as the lottery, volatility, beta, and IPO effects in capital market equilibrium

I am wondering what does "evolutionary predominance" mean?

evolutionary is gradually develop

predominance is the state or condition of being greater in number or amount

It seems to me that "evolutionary predominance" equals to "increasing important". But when I put this explanation to this context, it makes no sense.

2 Answers 2

1

The term "evolutionary predominance" alludes to Darwin's Theory of natural Selection now the standard explanation for the observed fact of evolution. This theory holds that those individuals who are more successful in reproduction will have more offspring and that thus their genetic traits will be better represented in later generations. It also holds that often such individuals will be better suited to survive adn prosper.

Here the text means that "investors who adopt active strategies" will be more successful, and thus, as time goes on, will make up a greater proportion of all investors. This is suggesting a process similar in mechanism and result to organic evolution.

1
  • "Here the text means that "investors who adopt active strategies" will be more successful, and thus, as time goes on, will make up a greater proportion of all investors" it is what I am looking for. Thanks Nov 2, 2021 at 23:46
1

Instead of looking at "evolutionary predominance" as a phrase, think of "evolutionary" as just an adjective. Part of the complication is that the author is using "evolution," a term from biology, as a metaphor to talk about economics. If you remove it from the sentence, you have:

In particular, the predominance of investors who adopt active strategies provides an explanation for...

This fits with the definition you found: the great number of these investors helps explain something.

"Evolutionary," then, creates an extended metaphor with the idea of natural selection. By adding that one word, the authors seem (to me) to be saying "The fact that we see so many of these types of investors helps explain these anomalies, just as biologists who find a predominance of a certain species might draw conclusions about the environment."

1
  • True but the biological metaphor invoked by "evolutionary" implies a cause for the economic predominance of such investors, not just a similarity of reasoning about the results of that predominance. Nov 2, 2021 at 23:24

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .