Markets and microbes

Economists are sometimes accused of scientific imperialism, but what is it when biologists find market models useful, as in this paper from PNAS?

Evolution of microbial markets

Abstract: Biological market theory has been used successfully to explain cooperative behavior in many animal species. Microbes also engage in cooperative behaviors, both with hosts and other microbes, that can be described in economic terms. However, a market approach is not traditionally used to analyze these interactions. Here, we extend the biological market framework to ask whether this theory is of use to evolutionary biologists studying microbes. We consider six economic strategies used by microbes to optimize their success in markets. We argue that an economic market framework is a useful tool to generate specific and interesting predictions about microbial interactions, including the evolution of partner discrimination, hoarding strategies, specialized versus diversified mutualistic services, and the role of spatial structures, such as flocks and consortia. There is untapped potential for studying the evolutionary dynamics of microbial systems. Market
theory can help structure this potential by characterizing strategic investment of microbes across a diversity of conditions.

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Update: my joke about imperialism was a bit opaque it turns out. To be clear, I'm a big admirer of cross fertilization between fields. Here's an earlier post about Noe's work...

Tuesday, April 13, 2010

Biological markets: exchange of goods and services among non-human species

From the web pages of the French scientist Ronald Noe:

Biological markets--from primates to cleaner wrasses to plants

Evolution as the designer of market exchange between and among members of different species: here's a Bloomberg article about the work of the primatologist Ronald Noe, the mathematical biologist Peter Hammerstein and a variety of other biologists.

The Secret Economic Lives of Animals
Wasps do it, baboons do it. Economics isn’t just a human activity.

"In 1994, Noë and Hammerstein laid out their new theory of biological markets in the journal Behavioral Ecology & Socialbiology. The paper fused the biologists’ different styles: Hammerstein developed the mathematical models, while Noë dug through the scientific literature for evidence from the field. Examples turned up across the animal kingdom. Male scorpion flies offer females a “nuptial gift” of prey before mating. In some species of bird, such as the purple martin, a male will allow another male to occupy part of his territory in exchange for help raising his young. Lycaenid butterfly caterpillars produce a sweet “nectar” whose only purpose is to attract ants, which eat the nectar and protect the caterpillars from predators.
...
"Noë and Hammerstein admit that one of the hardest parts of their theory is to fix quantities and exchange rates; most of the time they can only say how a change in supply and demand will influence an exchange. And they are also careful to draw distinctions between human and biological markets. Animals obviously can’t use currency or sign contracts. And the animal kingdom has no third-party institutions to punish cheaters. Evolution may have produced fish dentists, but it has yet to produce fish lawyers."


Here are my earlier posts about work by Ronald Noe

Philipp Strack, 2024 Clark Medalist by Drew Fudenberg, in the JEP

 Here's a celebration of Philipp Strack, the Yale economist who won the 2024 Clark Medal of the American Economic Association.

Philipp Strack, 2024 Clark Medalist  by Drew Fudenberg,  Journal of Economic Perspectives, vol. 39, no. 1, Winter 2025, (pp. 225–46)

Here are the first and last paragraphs:

"Philipp Strack is creative, insightful, and skillful, which has allowed him to make major contributions to many areas of microeconomic theory, including behavioral economics, information acquisition and learning, and mechanism design. Some of these papers provide a new understanding of important economics phenomena, others introduce results and techniques that will be used for years to come, and some of the papers do both. Together they have helped spark what his Clark Medal citation called a “new wave of information economics.”

 ...

"Philipp is one of the most cheerful and friendly people I know. I have greatly enjoyed working with and learning from him. He is also extraordinarily productive: as of June 2024, he had published 37 papers in the eleven years since the completion of his dissertation, with several others forthcoming. Of this output, my review has only covered some of the highlights. In addition to the work discussed here, Philipp has made contributions to the study of market design (in [11], with Jacob Leshno and [23], with Afshin Nikzad), on contests (in [15], with Dawei Fang and Thomas Noe and [1], with Christian Seel), on present bias (in [10], with Paul Heidhues), and on epidemics (in [12], with Thomas Kruse). Some of Philipp’s papers provide a new understanding of important economics phenomena, others introduce results and techniques that will be used for years to come, and many do both. All of his work is clear and insightful, and its influence seems sure to expand. "

Biological markets: exchange of goods and services among non-human species

From the web pages of the French scientist Ronald Noe:

Biological Markets. "The label 'biological markets' was proposed by Noë & Hammerstein (1994; 1995) for all interactions between organisms in which one can recognise different classes of 'traders' that exchange commodities, such as goods (e.g. food, shelter, gametes) or services (e.g. warning calls, protection, pollination). "
"The characteristics of biological markets are found in mating systems ('mating markets'), mutualisms between members of different species and cooperation among conspecifics

"The term 'market' was chosen because it is assumed that shifts in supply and demand cause changes in the exchange value of the commodities traded. Important phenomena are: partner choice and outbidding.

"Formal properties of Biological Markets
Commodities are exchanged between individuals that differ in the degree of control over these commodities
Trading partners are chosen from a number of potential partners.
There is competition among the members of the chosen class to be the most attractive partner. This competition by 'outbidding' causes an increase in the value of the commodity offered.
Supply and demand determine the bartering value of commodities exchanged.
Commodities on offer can be advertised. As in commercial advertisements there is a potential for false information."

"Explicitly excluded is the use of physical force or threat to appropriate commodities or to eliminate the competition. The use of force is common, of course, as are theft and foul play in human markets, but one needs different paradigms to describe these phenomena.

"Examples of Biological Markets:
Obligate pollination mutualisms (to be added)
Ant protection mutualisms (to be added)
Mycorrhiza & rhizobia
Cleaner fish
Grooming in primates
Cooperative breeders
Delayed plumage maturation
Nest building in red bishops
links to further examples"

See also Market Models, on papers using game theory and comparative advantage to explore biological markets, which includes a bibliography of "Related theoretical approaches that also revolve around phenomena such as partner choice and competition by outbidding ..."