Modern Portfolio Theory and the prudent hermaphrodite

Abstract

Summary Employment of Markowitz's Modern Portfolio Theory, economic models designed to predict the effect of variance and covariance on optimal investment allocation, may explain a wide variety of anomalies in reproductive biology. Natural selection appears to favor genetic diversity among offspring to a greater extent than is predicted by current theory. Consideration of the possible increase in fitness by reducing the covariance among offspring may help explain a variety of phenomena from multiple mating to the evolution of recombination (i.e., overcoming “the cost of meiosis”). Modern Portfolio Theory also make novel predictions as to when hermaphrodites should prefer the male vs. female role, i.e., engage in egg- vs. sperm-trading. It predicts that the sexual role with the lower variance in reproductive success will be preferred in hermaphrodites. This contradicts Bateman's principle that the male role is usually preferred due to energetic considerations but is consistent with Gillespie's principle. The available data suggest that mating hermaphrodites are risk-averse; gamete-trading whether of eggs or sperm is a strategy to reduce risk. In addition to overall variance, the skew of the distribution can be used to predict the mating systems of hermaphrodites and thus clarify the factors that are responsible for observed patterns of sex allocation and sexual conflict. The reduction of covariance among offspring may also help resolve “Williams' paradox”; that the observed distribution of dieoecy vs. simultaneous hermaphroditism in the Animal Kingdom cannot be explained by the prevailing models of the evolution of hermaphroditism.