Working Paper, University of Massachusetts, Department of Economics 2000-05
A number of outstanding puzzles in economics may be resolved by recognizing that where members of a group benefit from mutual adherence to a social norm, agents may obey the norm and punish its violators, even when this behavior cannot be motivated by self-regarding, outcome-oriented preferences. This behavior, which we call strong reciprocity, is a form of altruism in that it benefits others at the expense of the individual exhibiting it. While economists have doubted the evolutionary viability of altruistic preferences, we show that strong reciprocity can invade a population of non-reciprocators and can be sustained in a stable population equilibrium. Under assumptions that may reflect the relevant historical conditions, the model describes the genetic evolution of strong reciprocity as a component in the repertoire of human preferences.