51 – Endogenous Social Preferences, Heterogeneity and Cooperation

We set up an analytical framework focusing on the problem of interaction over time when economic agents are characterized by various types of distributional social preferences.

We develop an evolutionary approach in which individual preferences are endogenous and account for the evolution of cooperation when all the players are initially entirely selfish.

In particular, within motivationally heterogeneous agents embedded in a social network, we adopt a variant of the indirect evolutionary approach, where material payoffs play a critical role, and assume that a coevolutionary process occurs in which subjective preferences gradually evolve due to a key mechanism involving behavioral choices, relational intensity and degree of social openness.

The simulations we carried out led to strongly consistent results with regard to the evolution of player types, the dynamics of material payoffs, the creation of significant interpersonal relationships among agents and the frequency of cooperation.

In the long run, cooperation turns out to be the strategic choice that obtains the best performances, in terms of material payoffs, and ‘nice guys’, far from finishing last, succeed in coming out ahead.

JEL Classification: B41; C73; D74; Z13.