Inequality Aversion in a Variety of Games – An Indirect Evolutionary Analysis

Abstract

The indirect evolutionary approach integrates forward-looking evaluation of opportunities and adaptation in the light of the past. Subjective motivation determines behaviour, but long-run evolutionary success of motivational types depends on objective factors only. This can justify intrinsic aversion to inequality in reward allocation games. Whereas earlier analysis was restricted to specific games, this article considers a more complex environment comprising different games whichstudied in isolation -yield opposite implications. Persistent divergence between intrinsic motivation and true material success is possible depending on the definition of inequality aversion as well as on agentsÕ ability to discriminate between games.* We gratefully acknowledge the constructive comments made by A. Poulsen and two anonymous referees. 1 For related studies see the contributions collected in the symposium in

Reciprocity—an indirect evolutionary analysis

“…Güth and Napel find moderate increases in the stable level of inequity aversion after raising λ, while here the reciprocity parameter diverges once a critical point is reached. Coincidentally, the minimal level at which the amount of ultimatum games played affects the outcome is similar in both studies, about 80% in Güth and Napel (2002) and around 85% for a wide range of constellations here; below these thresholds, the contrasting long-run outcomes for dictator and ultimatum games are independent of the precise composition of the stylized 'game of life'. In summary, both specifications of the utility function evolution lead to qualitatively similar outcomes in ultimatum, dictator and mixed environments.…”

“…Section 3 gives a brief introduction to the indirect evolutionary approach, section 4 presents our model, which is analyzed in section 5 with focus on the question: Under which circumstances is a reciprocity-based notion of fairness evolutionary stable? Section 6 compares results to those obtained in a related model by Güth and Napel (2002). Section 7 concludes.…”

“…If Nature permits players to condition the social component of their pref-erences on different games (as investigated by Güth and Napel 2002) or at least indirectly on differences in games, the same agents can exhibit a pronounced sense of fairness in one type of social interaction while they are entirely selfish in another one. This is true even though preferences are assumed to evolve simultaneously in a multi-game environment.…”

“…Recall that the crucial difference between this model and that of Güth and Napel (2002) is the considered class of preferences. Agents' sense of fairness is limited to inequity aversion in the paper of Güth and Napel, while here a partly intention-based preference for reciprocation is investigated.…”

“…The following analysis is motivated by Güth and Napel (2002). There, equitybased preferences similar to those of Fehr and Schmidt (1999) are subjected to evolutionary pressures in an environment consisting of a highly stylized 'game of life'.…”