Preference Evolution and Reciprocity

This paper provides an evolutionary theory of reciprocity as an aspect of preference interdependence. It is shown that reciprocal preferences, which place negative weight on the payoffs of materialists and positive weight on the payoffs of sufficiently altruistic individuals can invade a population of materialists in a class of aggregative games under both individual selection and random matching. Such preferences are efficiency-reducing when they are rare and efficiency-enhancing when they are widespread, suggesting that they can persist even under group selection and assortative matching. In comparison with simpler specifications of preference interdependence (such as pure altruism or envy), the survival of such preferences is therefore less sensitive to details of the evolutionary selection process.