On The Evolution of Interdependent Preferences in a Common Property Resource Game

Some researchers argue that co-operative behaviour is possible in the commons because individuals, instead of just being concerned with their own material payoffs, are also concerned with the material payoffs of others. In the economic literature these types of preferences are sometimes called "interdependent". However, while there is much informal discussion on the importance of individual preferences in the exploitation of common property resources, there is still little in the way of formal evolutionary modelling. It is in this context that this essay is intended to make a contribution. The main aim of this paper is to study the evolution of altruistic, spiteful and reciprocal preferences in the particular context of local commons using specifically the evolutionary-game-theoretic concept of ESS. In particular, here we explore the “pairwise random matching” strategic environment in the context of a simple symmetric 2-person CPR game with the strategy set as a continuous variable. In order to study the evolution of preferences in the CPR game we use the so-called “indirect evolutionary approach”. Specifically, we use this approach in the spirit of Bester and Güth’s (1998) work on the evolution of altruistic preferences under pairwise random matching in general. We extend Bester and Güth’s (1998) analysis in the sense that we not only explore the evolutionary stability of altruistic preferences but also the evolutionary stability of spiteful and reciprocal preferences. In particular, here we propose a general specification of reciprocal preferences based on Levine’s model (Levine, 1998). This alternative model of reciprocity allows us to explore the evolution of what we call here “pure reciprocal preferences”. JEL Classification: C72, D62, Q20