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Evolutionary Approaches Towards Preferences

Final Report Summary - EATP (Evolutionary Approaches Towards Preferences)

The PI’s project developed as planned and in line with the proposed time-line. Below, the main achievements of three parts of the projects are outlined with the corresponding expected journal publications.

First, the PI has accomplished a project on the effects of sexual reproduction on time preferences. This project considers the evolutionary basis of intertemporal choice and the rate of time preference, in particular, when there are intergenerational transfers. One of the main finding is that the notion of “reproductive value” from biology provides the utility criterion for a parent to optimize the allocation of resources between transfers to offspring and for promoting her own survival to the next period. This optimization has a natural dynamic programming formulation. Another finding is that younger individuals may well be “too impatient” but older individuals “too patient,” in a sense that agrees with observations. The project compares the allocation of resources under sexual reproduction to that where there is asexual reproduction. It turns out that sex distorts the rate of time preference, but there is no general bias towards greater impatience; under plausible conditions, sex may well imply greater patience. This project led to published a paper related in the American Economic Journal: Microeconomics. The title of the paper is: “The Evolutionary basis of time preference: Intergenerational Transfers and Sex.” The paper is coauthored with Arthur Robson.

Second, the PI has accomplished a project on social discounting. This project considers a growth model in which intergenerational transfers are made via stocks of private and public capital. Private capital is the outcome of individuals' private savings while decisions regarding public capital are made collectively. It is hypothesized that private saving choices evolve through individual selection while public saving decisions are the result of group selection. The main result of the project is that the equilibrium return to private capital is more than twice as larger as the return to public capital if the two types of capital are complements. In other words, social choices involving intertemporal trade-offs exhibit much more patience than individual choices do. The PI has completed a paper on this project titled as: “A Biological Theory of Social Discounting.” This paper is also coauthored with Arthur Robson. The paper will be soon submitted to the American Economic Review.

Third, the PI finished a project on suicide. This project establishes a theoretical model in which individuals have hereditary reproductive types. The reproductive value of an individual is determined by her reproductive type and the amount of resources she can access. We introduce the possibility of suicide and assume it is also a genetic trait that interacts with the reproductive type of an individual. The main result of this project is that populations where suicide is possible grow faster than other populations. The final product of this project is a paper titled as “An Evolutionary Theory of Suicide.” This paper is published in the Games.

Fourth, the PI has completed and revised his project on racial discrimination. This project considers a dynamic economy in which agents are repeatedly matched with one another and decide whether to enter into profitable partnerships. Each agent has a physical colour and a social colour. The social colour of an agent acts as a signal about the physical colour of agents in his partnership history. Before an agent makes a decision, he observes his match's physical and social colours. Neither the physical colour nor the social colour is payoff-relevant. The project identifies environments where, in some equilibria, agents condition their decisions on the physical and social colours of their potential partners. That is, they discriminate. The main result of the project is that, in these aforementioned environments, every stable equilibrium must involve discrimination. In particular, the colour-blind equilibrium is unstable. The result of this project is a paper (co-authored with Caroline Thomas) titled as “Spontaneous Discrimination.” The paper is published at the American Economic Review.

Finally, the PI has completed a project on risk preferences. This project considers continuous-time biological models in which the growth rate of a population is determined by the risk attitude of its individuals. We consider choices over lotteries which determine the number of offspring and involve both idiosyncratic and aggregate risks. We distinguish between two types of aggregate risk: environmental shocks and natural disasters. Environmental shocks influence the death and birth rates, while natural disasters result in instantaneous drops in population size. Our main result is a utility representation of the evolutionary optimal behavior. The utility is additively separable in the two types of aggregate risk. The term involving environmental shocks is a von Neumann-Morgenstern utility which induces the same attitude towards both idiosyncratic and aggregate risk. The term involving disasters cannot be interpreted as an expected utility maximization and induces less tolerance towards aggregate risk. The result of this project is a paper titled as “On the Biological Foundation of Risk Preferences” and it is co-authored with Roberto Robatto.