Carrot or Stick: The Evolution of Reciprocal Preferences in a Haystack Model

Munich Discussion Paper No. 2003-5

42 Pages Posted: 5 Aug 2003 Last revised: 12 Feb 2010

Date Written: February 5, 2010

Abstract

This paper studies the evolution and co-evolution of both characteristics of reciprocity - the willingness to reward friendly behavior and the willingness to punish hostile behavior. Firstly, both preferences for rewarding and preferences for punishing can survive in evolution provided individuals interact within separate groups. This holds even with randomly formed groups and even when individual preferences are unobservable, provided players adjust their play to the environment in their group. Secondly, preferences for rewarding survive only in coexistence with self-interested preferences, but preferences for punishing either vanish or dominate the population entirely. Thirdly, the evolution of preferences for rewarding and the evolution of preferences for punishing influence each other decisively. Rewarders can invade a population of self-interested players. The existence of rewarders enhances the evolutionary success of punishers, who then crowd out all other preference types.

Keywords: Reciprocity, Evolution of Preferences, Group Selection

JEL Classification: C72, D63, D64, D83

Suggested Citation

Herold, Florian, Carrot or Stick: The Evolution of Reciprocal Preferences in a Haystack Model (February 5, 2010). Munich Discussion Paper No. 2003-5, Available at SSRN: https://ssrn.com/abstract=421302 or http://dx.doi.org/10.2139/ssrn.421302

Florian Herold (Contact Author)

Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS) ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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