Evolutionary Stability of Preferences: Altruism, Selfishness and Envy

Abstract

This paper examines evolutionary stability of preferences by employing deterministic replicator dynamics. The preferences of players are classified into three types: altruism, selfishness, and envy. In the stage game, players compete in pairs to maximize their subjective utilities, and, as a consequence, their material payoffs are realized. We find: (i) a monomorphic population of the altruistic (the envious) has the highest (the lowest) material payoffs; and (ii) in a game between asymmetric preference types, the payoff ordering is reversed, that is, the material payoffs of the altruistic (the envious) are the lowest (the highest). We also investigate the long-run evolution process of preference types by taking the indirect evolutionary approach, under the deterministic replicator dynamics. We first show that if players' efforts are strategic complements, envy is strictly dominated, whereas altruism is strictly dominated if efforts are strategic substitutes, implying that the strictly dominated types die out in the long run. Then, we obtain our main result that there can exist a long-run stable state in which selfish players and envious players survive together if efforts are strategic substitutes, whereas there exists no long-run stable state in which altruistic players and selfish players coexist if efforts are strategic complements.