IDEAS home Printed from https://ideas.repec.org/a/aea/aecrev/v102y2012i2p914-40.html
   My bibliography  Save this article

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

Author

Listed:
  • Florian Herold

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)

Suggested Citation

  • Florian Herold, 2012. "Carrot or Stick? The Evolution of Reciprocal Preferences in a Haystack Model," American Economic Review, American Economic Association, vol. 102(2), pages 914-940, April.
    • Handle: RePEc:aea:aecrev:v:102:y:2012:i:2:p:914-40
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.102.2.914
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ernst Fehr & Simon Gächter, 2000. "Fairness and Retaliation: The Economics of Reciprocity," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 159-181, Summer.
    2. Jehiel, Philippe & Samet, Dov, 2005. "Learning to play games in extensive form by valuation," Journal of Economic Theory, Elsevier, vol. 124(2), pages 129-148, October.
    3. 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.
    4. Huck, Steffen & Oechssler, Jorg, 1999. "The Indirect Evolutionary Approach to Explaining Fair Allocations," Games and Economic Behavior, Elsevier, vol. 28(1), pages 13-24, July.
    5. 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.
    6. Bester, Helmut & Guth, Werner, 1998. "Is altruism evolutionarily stable?," Journal of Economic Behavior & Organization, Elsevier, vol. 34(2), pages 193-209, February.
    7. Sethi, Rajiv & Somanathan, E., 2001. "Preference Evolution and Reciprocity," Journal of Economic Theory, Elsevier, vol. 97(2), pages 273-297, April.
    8. Herbert Gintis, 2000. "Strong Reciprocity and Human Sociality," UMASS Amherst Economics Working Papers 2000-02, University of Massachusetts Amherst, Department of Economics.
    9. Ely, Jeffrey C. & Yilankaya, Okan, 2001. "Nash Equilibrium and the Evolution of Preferences," Journal of Economic Theory, Elsevier, vol. 97(2), pages 255-272, April.
    10. Theodore C. Bergstrom, 2003. "The Algebra of Assortative Encounters and the Evolution of Cooperation," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 5(03), pages 211-228.
    11. 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.
    12. Sethi, Rajiv, 1996. "Evolutionary stability and social norms," Journal of Economic Behavior & Organization, Elsevier, vol. 29(1), pages 113-140, January.
    13. 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.
    14. 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 157-179, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sivan Frenkel & Yuval Heller & Roee Teper, 2018. "The Endowment Effect As Blessing," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(3), pages 1159-1186, August.
    2. Adriani, Fabrizio & Sonderegger, Silvia, 2020. "Optimal similarity judgments in intertemporal choice (and beyond)," Journal of Economic Theory, Elsevier, vol. 190(C).
    3. Peña, Jorge & Lehmann, Laurent & Nöldeke, Georg, 2013. "Gains from switching and evolutionary stability in multi-player matrix games," Working papers 2013/13, Faculty of Business and Economics - University of Basel.
    4. Yoshio Kamijo, 2014. "A theory of sanctions: Objectives, degree of heterogeneity, and growth potential matter for optimal use of carrot or stick," Working Papers SDES-2014-13, Kochi University of Technology, School of Economics and Management, revised Oct 2014.
    5. Yuval Heller & Erik Mohlin, 2018. "Observations on Cooperation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(4), pages 2253-2282.
    6. Michaeli, Moti, 2020. "Grouping, in-group bias and the cost of cheating," Games and Economic Behavior, Elsevier, vol. 121(C), pages 90-107.
    7. Jonathan Newton, 2018. "Evolutionary Game Theory: A Renaissance," Games, MDPI, vol. 9(2), pages 1-67, May.
    8. Fabrizio Adriani & Silvia Sonderegger, 2018. "The Signaling Value of Punishing Norm-Breakers and Rewarding Norm-Followers," Games, MDPI, vol. 9(4), pages 1-32, December.
    9. Olcina, Gonzalo & Calabuig, Vicente, 2021. "Trust and punishment," European Journal of Political Economy, Elsevier, vol. 70(C).
    10. Alex Barrachina & Víctor González-Chordá, 2016. "To report or not to report: Applying game theory to nursing error reporting," Working Papers 2016/14, Economics Department, Universitat Jaume I, Castellón (Spain).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Herold, Florian, 2003. "Carrot or Stick? Group Selection and the Evolution of Reciprocal Preferences," Discussion Papers in Economics 40, University of Munich, Department of Economics.
    2. Sethi, Rajiv & Somanathan, E., 2003. "Understanding reciprocity," Journal of Economic Behavior & Organization, Elsevier, vol. 50(1), pages 1-27, January.
    3. Rajiv Sethi & E. Somanathan, 2001. "Norm Compliance and Strong Reciprocity," Working Papers 01-09-048, Santa Fe Institute.
    4. Ziwei Wang & Jiabin Wu, 2023. "Partner Choice and Morality: Preference Evolution under Stable Matching," Papers 2304.11504, arXiv.org, revised Oct 2023.
    5. Jiabin Wu, 2020. "Labelling, homophily and preference evolution," International Journal of Game Theory, Springer;Game Theory Society, vol. 49(1), pages 1-22, March.
    6. Ingela Alger & Jörgen W. Weibull, 2019. "Evolutionary Models of Preference Formation," Annual Review of Economics, Annual Reviews, vol. 11(1), pages 329-354, August.
    7. Poulsen, Anders, 2001. "Reciprocity, Materialism and Welfare: An Evolutionary Model," Working Papers 01-3, University of Aarhus, Aarhus School of Business, Department of Economics.
    8. Heifetz, Aviad & Shannon, Chris & Spiegel, Yossi, 2007. "What to maximize if you must," Journal of Economic Theory, Elsevier, vol. 133(1), pages 31-57, March.
    9. Alex Possajennikov, 2004. "Two-Speed Evolution of Strategies and Preferences In Symmetric Games," Theory and Decision, Springer, vol. 57(3), pages 227-263, November.
    10. Daniel Friedman & Nirvikar Singh, 2004. "Vengefulness Evolves in Small Groups," Palgrave Macmillan Books, in: Steffen Huck (ed.), Advances in Understanding Strategic Behaviour, chapter 3, pages 28-54, Palgrave Macmillan.
    11. Friedman, Daniel & Singh, Nirvikar, 2004. "Vengefulness Evolves in Small Groups," Santa Cruz Department of Economics, Working Paper Series qt0xp29105, Department of Economics, UC Santa Cruz.
    12. Konrad, Kai A. & Morath, Florian, 2016. "Bargaining with incomplete information: Evolutionary stability in finite populations," Journal of Mathematical Economics, Elsevier, vol. 65(C), pages 118-131.
    13. 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.
    14. Alger, Ingela & Weibull, Jörgen W., 2016. "Evolution and Kantian morality," Games and Economic Behavior, Elsevier, vol. 98(C), pages 56-67.
    15. Aviad Heifetz & Chris Shannon & Yossi Spiegel, 2007. "The Dynamic Evolution of Preferences," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 32(2), pages 251-286, August.
    16. Alger, Ingela & Lehmann, Laurent & Weibull, Jörgen W., 2018. "Evolution of preferences in group-structured populations: genes, guns, and culture," IAST Working Papers 18-73, Institute for Advanced Study in Toulouse (IAST), revised Oct 2019.
    17. Thomas Norman, 2004. "Dynamically Stable Preferences," Economics Series Working Papers 207, University of Oxford, Department of Economics.
    18. Ingela Alger & Jörgen W. Weibull, 2013. "Homo Moralis—Preference Evolution Under Incomplete Information and Assortative Matching," Econometrica, Econometric Society, vol. 81(6), pages 2269-2302, November.
    19. Alger, Ingela & Weibull, Jörgen W., 2014. "Evolution leads to Kantian morality," TSE Working Papers 14-504, Toulouse School of Economics (TSE), revised Jun 2015.
    20. Norman, Thomas W.L., 2012. "Equilibrium selection and the dynamic evolution of preferences," Games and Economic Behavior, Elsevier, vol. 74(1), pages 311-320.

    More about this item

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • 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
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:102:y:2012:i:2:p:914-40. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.