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

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