Social Capital and Endogenous Preferences

Abstract

In this paper we analyze whether social capital can emerge endogenously from a process of preference evolution. We define social capital as preferences that promote voluntary cooperation in a one-shot Prisoner's Dilemma game. We investigate how the endogenous pref- erences depend on the amount of information individuals have about each other's preferences. When there is sufficiently much information, maximal social capital emerges. In general, the level of social capital varies positively with the amount of information. Our results may add to an understanding of the factors that determine a society's ability to generate cooperative outcomes.