Coevolution of Deception and Preferences: Darwin and Nash Meet Machiavelli

46 Pages Posted: 2 Sep 2014 Last revised: 27 Sep 2018

See all articles by Yuval Heller

Yuval Heller

Bar Ilan University

Erik Mohlin

University of Oxford - Nuffield College of Medicine

Date Written: September 21, 2018

Abstract

We develop a framework in which individuals' preferences coevolve with their abilities to deceive others about their preferences and intentions. Specifically, individuals are characterised by (i) a level of cognitive sophistication and (ii) a subjective utility function. Increased cognition is costly, but higher-level individuals have the advantage of being able to deceive lower-level opponents about their preferences and intentions in some of the matches. In the remaining matches, the individuals observe each other's preferences. Our main result shows that, essentially, only efficient outcomes can be stable. Moreover, under additional mild assumptions, we show that an efficient outcome is stable if and only if the gain from unilateral deviation is smaller than the effective cost of deception in the environment. Finally, we extend our model to study preferences that depend also on the opponent's type.

Keywords: Evolution of Preferences, Indirect Evolutionary Approach, Theory of Mind, Depth of Reasoning, Deception

JEL Classification: C72, C73, D01, D03, D83

Suggested Citation

Heller, Yuval and Mohlin, Erik, Coevolution of Deception and Preferences: Darwin and Nash Meet Machiavelli (September 21, 2018). Games and Economic Behavior, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2490370 or http://dx.doi.org/10.2139/ssrn.2490370

Yuval Heller (Contact Author)

Bar Ilan University ( email )

Dept. of Economics, Building 504
Bar Ilan University
Ramat Gan, 5290002
Israel
+972 5252 82182 (Phone)

HOME PAGE: http://https://sites.google.com/site/yuval26/

Erik Mohlin

University of Oxford - Nuffield College of Medicine ( email )

New Road
Oxford, OX1 1NF
United Kingdom

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