Journal of Economic Behavior & Organization Vol. 42 (2000) 131–133
Is altruism evolutionarily stable? And envy and
malevolence?
Remarks on Bester and Güth
Friedel Bolle
∗Europa-Universität Viadrina, Lehrstuhl Volkswirtschaftslehre, Insbesondere Wirtschaftstheorie, Postfach 776, 15207 Frankfurt, Germany
Received 11 January 1999; received in revised form 19 February 1999; accepted 19 February 1999
Abstract
In a convincing analysis of the conditions and strength of altruism, Bester and Güth [Journal of Economic Behavior & Organization, Vol. 34, 1998, 193-209] unfortunately restrict the interpre-tation of their results. Their paper provides us with an analysis of the conditions and strength of malevolence (or envy) as well. ©2000 Elsevier Science B.V. All rights reserved.
JEL classification: A13; C72; D64
Keywords: Altruism; Evolutionary stability; Endogenous preferences; Strategic complements; Substitutes
In a recent paper, Bester and Güth (1998) show that altruism can be evolutionarily stable if the members of a society play, pairwise, duopoly games or if there are other pairwise relations. In their model, the crucial condition is that the games exhibit strategic comple-mentaries, for example, because positive externalities are produced1. In the latter case, the marginal costs of production decrease when the other’s production increases.
Under such nice conditions, an altruist can successfully invade a society of egoists. What, at first glance looks rather surprising is easily understood if we consider altruism as a device to bind oneself to produce larger quantities than under ‘normal’ egoistic preferences. If the altruist produces more, he decreases the marginal costs of his counterpart and, thus, also makes his egoistic counterpart produce more (though not as much as the altruist).
∗Tel.:+49-335-5534-289; fax:+49-335-5534-390.
E-mail address: bolle@euv-frankfurt-o.de (F. Bolle).
1For the sake of simplicity one might think of household production or of products which are sold on different markets.
132 F. Bolle / J. of Economic Behavior & Org. 42 (2000) 131–133
This might result, and does result, under Bester and Güth’s model specification in the following situation: The altruist who encounters an egoist earns a larger profit than an egoist who encounters an egoist. The consequence is that altruism will spread.
Imagine again a society of egoists. This time, however, production is accompanied by negative externalities, i.e. marginal production costs increase with increasing production of the other producer. An altruist cannot invade this society. He would reduce his quantity produced (thus reducing his profit), but again his counterpart would increase his quantity because of his reduced marginal costs (thus reducing the altruist’s profit again).
This time, however, malevolence (envy2) turns out to be successful. A malevolent person is bound to produce more in such a situation, thus making his counterpart reduce his quantity. The malevolent player is in the advantageous Stackelberg position — his malevolence providing him with the necessary credibility.
Bester and Güth (1998) artificially exclude this possibility by restricting their parameter space. Altruism is expressed by the parameter a in the ‘subjective’ preferences
Vi =αUi+(1−α)Uj, j 6=i
with Ui, Ujbeing objective values (profits).αis restricted to the interval [1/2, 1]. The lower
limit is reasonable because otherwise we would run into paradoxes of altruism, called the ‘after you’ problem by Collard (1978). There is no need, however, for the upper limit3. All formulas and propositions of Bester and Güth (1998) allowα>1. In particular, their formula for the evolutionarily stable amount of altruism can be used in the case of malevolence (envy) as well, i.e. for strategic complements as well as for strategic substitutes (negative externalities in the example above).
In the case of strategic substitutes, however, the consequences of such a process are disastrous. Already under egoistic preferences, the members of a society play a Prisoners’ Dilemma game, i.e. they behave socially suboptimally. ‘Evolution’ toward malevolence worsens this situation, i.e. the equilibria are even more unattractive.
But if we buy the nice result on the emergence of altruism in certain situations we also have to accept the possibility that ugly malevolence emerges in other situations. For most people this will be easy to accept. As they are rather sceptical about the existence of free lunches, economists in particular are difficult to convince that such a thing as altruism exists. But the experience of envy and malevolence is so widespread that you hardly find anyone who denies that they exist.
Perhaps the consequences of strategic substitutes are not as severe as they seem. Altruism is only one social device for overcoming Prisoners’ Dilemma situations. And the larger the possible gains are, the more probable it is that such devices are used. If they are used, on the other hand, the individual advantage of envy deteriorates and, thus, the evolutionarily stable strength of this despised4 emotion decreases.
2Discussion takes place at two levels; at the level of emotions and at the level of actions (in Bester and Güth (1998) described by variablesαand x, respectively). One might try to distinguish between those levels (see Bolle, 1991) by talking about love or sympathy in the case of ‘positive’ emotions, and hatred or envy in the case of ‘negative’ ones. The level of actions identifies altruistic or malevolent acts.
3The formulation (1) is ‘suggestive’. We could describe V
iequivalently by Vi=Ui+γUjwithγ <1.
F. Bolle / J. of Economic Behavior & Org. 42 (2000) 131–133 133
Men are equipped with a rich set of emotions including altruism (love) and tastes for fair-ness and reciprocity (thankfulfair-ness, revenge loving), and the above shows us why. One social emotion alone might outweigh the efficiency it creates in certain situations by additional inefficiency in other environments.
References
Bester, H., Güth, W., 1998. Is altruism evolutionarily stable Journal of Economic Behavior & Organization 34, 193–209.
