Coevolution of Deception and Preferences: Darwin and Nash Meet Machiavelli

Abstract

We develop a framework in which individuals'preferences co-evolve with their abilities to deceive others regarding their preferences and intentions. We show that a pure outcome is stable, essentially if and only if it is an e¢ cient Nash equilibrium.All individuals have the same deception ability in such a stable state. In contrast, there are non-pure outcomes in which non-Nash outcomes are played, and di¤erent deception abilities co-exist. We extend our model to study preferences that depend also on the opponent's type.

Biased-Belief Equilibrium

“…Specifically, we interpret a BBE to be a reduced-form solution concept capturing the essential features of an evolutionary process of cultural or social learning. Our methodology follows the extensive literature that studies the stability of endogenous preferences using the "indirect evolutionary approach" (see, e.g., Güth and Yaari, 1992;Güth, 1995;Fershtman and Weiss, 1998;Dufwenberg and Güth, 1999;Koçkesen, Ok, and Sethi, 2000;Guttman, 2003;Güth and Napel, 2006;Heifetz, Shannon, and Spiegel, 2007b;Friedman and Singh, 2009;Herold and Kuzmics, 2009;Alger and Weibull, 2013;Heller and Mohlin, 2017). We apply this modeling approach to the study of endogenous biased beliefs in a setup in which biased beliefs induce behavior, behavior determines "success," and success regulates the evolution of biased beliefs.…”

Evolutionary Game Theory: A Renaissance

“…Heller and Mohlin [155] consider the evolution of preferences and cognition in an environment of symmetric two player normal form games. The cognition of a player is a natural number, with larger numbers representing higher levels of cognition.…”

Stable Observable Behavior

“…It seems intriguing, to study richer environments in which players are endowed with "universal" (non-game-specific) preferences over fitness profiles, and they interact in different games (and use the same preferences in all these games). Another interesting direction (pursued in a companion working paper, Heller & Mohlin, 2014) is allowing agents to spend effort in deception -influencing the signal observed by the opponent. Third, our model assumes that players directly observe past actions of the partner.…”