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

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  • Florian Herold
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    Abstract

    We study the evolution of both characteristics of reciprocity: the willingness to reward and the willingness to punish. First, both preferences for rewarding and preferences for punishing can survive provided that individuals interact within separate groups. Second, rewarders survive only in coexistence with self-interested preferences, but punishers either vanish or dominate the population entirely. Third, 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 preferences. (JEL C71, C72, C73, D64, K42)

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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.102.2.914
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    Bibliographic Info

    Article provided by American Economic Association in its journal American Economic Review.

    Volume (Year): 102 (2012)
    Issue (Month): 2 (April)
    Pages: 914-40

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    Handle: RePEc:aea:aecrev:v:102:y:2012:i:2:p:914-40

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    1. Jeffrey C. Ely & Okan Yilankaya, 1997. "Nash Equilibrium and the Evolution of Preferences," Discussion Papers 1191, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    2. Eshel, Ilan & Samuelson, Larry & Shaked, Avner, 1998. "Altruists, Egoists, and Hooligans in a Local Interaction Model," American Economic Review, American Economic Association, vol. 88(1), pages 157-79, March.
    3. Philippe Jehiel & Dov Samet, 2001. "Learning To Play Games In Extensive Form By Valuation," Levine's Working Paper Archive 391749000000000010, David K. Levine.
    4. Ernst Fehr & Simon Gaechter, . "Fairness and Retaliation: The Economics of Reciprocitys," IEW - Working Papers 040, Institute for Empirical Research in Economics - University of Zurich.
    5. Bester, Helmut & Guth, Werner, 1998. "Is altruism evolutionarily stable?," Journal of Economic Behavior & Organization, Elsevier, vol. 34(2), pages 193-209, February.
    6. Ben Cooper & Chris Wallace, 2004. "Group selection and the evolution of altruism," Oxford Economic Papers, Oxford University Press, vol. 56(2), pages 307-330, April.
    7. Sethi, Rajiv & Somanathan, E., 2001. "Preference Evolution and Reciprocity," Journal of Economic Theory, Elsevier, vol. 97(2), pages 273-297, April.
    8. Steffen Huck & Joerg Oechssler, 1995. "The Indirect Evolutionary Approach to Explaining Fair Allocations," Game Theory and Information 9507001, EconWPA, revised 27 Aug 1998.
    9. James Andreoni & William Harbaugh & Lise Vesterlund, 2003. "The Carrot or the Stick: Rewards, Punishments, and Cooperation," American Economic Review, American Economic Association, vol. 93(3), pages 893-902, June.
    10. Frank, Robert H, 1987. "If Homo Economicus Could Choose His Own Utility Function, Would He Want One with a Conscience?," American Economic Review, American Economic Association, vol. 77(4), pages 593-604, September.
    11. Herbert Gintis, 2000. "Strong Reciprocity and Human Sociality," UMASS Amherst Economics Working Papers 2000-02, University of Massachusetts Amherst, Department of Economics.
    12. Sethi, Rajiv, 1996. "Evolutionary stability and social norms," Journal of Economic Behavior & Organization, Elsevier, vol. 29(1), pages 113-140, January.
    13. Ok, Efe A. & Vega-Redondo, Fernando, 2001. "On the Evolution of Individualistic Preferences: An Incomplete Information Scenario," Journal of Economic Theory, Elsevier, vol. 97(2), pages 231-254, April.
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    Cited by:
    1. Laurent Lehmann & Georg Nöldeke & Jorge Peña, 2013. "Gains from switching and evolutionary stability in multi-player matrix games," Working papers 2013/13, Faculty of Business and Economics - University of Basel.

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