Evolution and Information in a Gift-Giving Game

In an environment of anonymous random matching, Kandori [1992] showed that with a sufficiently rich class of simple information systems the folk theorem holds. We specialize to a gift-giving game and examine the stochastic stability of a process of learning and evolution in this setting. If the benefit of future altruism is too small, then there is no altruism. When the benefit of altruism is large then only altruism will survive in the very long run. 1 We are grateful to financial support from National Science Foundation Grant SBR-93-20695 and the UCLA Academic Senate. Centro de Investigación Economía, ITAM, Department of Economics, UCLA, and Department of Economics, Princeton University.