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Coevolution of deception and preferences: Darwin and Nash meet Machiavelli

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  • Heller, Yuval
  • Mohlin, Erik

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.

Suggested Citation

  • Heller, Yuval & Mohlin, Erik, 2019. "Coevolution of deception and preferences: Darwin and Nash meet Machiavelli," Games and Economic Behavior, Elsevier, vol. 113(C), pages 223-247.
  • Handle: RePEc:eee:gamebe:v:113:y:2019:i:c:p:223-247
    DOI: 10.1016/j.geb.2018.09.011
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    Cited by:

    1. Yuval Heller & Erik Mohlin, 2018. "Observations on Cooperation," Review of Economic Studies, Oxford University Press, vol. 85(4), pages 2253-2282.
    2. Pardo, Oliver, 2017. "A note on “Evolution of Preferences”," Journal of Mathematical Economics, Elsevier, vol. 71(C), pages 129-134.
    3. Florian Gauer & Christoph Kuzmics, 2016. "Cognitive Empathy in Conflict Situations," Graz Economics Papers 2016-02, University of Graz, Department of Economics.
    4. Heller, Yuval & Mohlin, Erik, 2015. "Stable Observable Behavior," MPRA Paper 63013, University Library of Munich, Germany.
    5. Heller, Yuval & Winter, Eyal, 2011. "Biased-Belief Equilibrium," MPRA Paper 89912, University Library of Munich, Germany, revised 09 Nov 2018.

    More about this item

    Keywords

    Evolution of preferences; Indirect evolutionary approach; Theory of mind; Depth of reasoning; Deception; Efficiency;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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