Evolution of Preferences in Multiple Populations

TL;DR

This paper analyzes how preferences evolve in multi-population settings with cross-population matches, examining stability conditions under different levels of preference observability and their robustness.

Contribution

It derives necessary and sufficient stability conditions for full and no observability, extending to small perturbations in preference observability.

Findings

Stability conditions are characterized for both full and no preference observability.

Results show robustness of stability conditions under small perturbations.

The framework applies to multi-population matching scenarios with subjective preferences.

Abstract

We study the evolution of preferences in multi-population settings that allow matches across distinct populations. Each individual has subjective preferences over potential outcomes, and chooses a best response based on his preferences and the information about the opponents' preferences. Individuals' realized fitnesses are given by material payoff functions. Following Dekel et al. (2007), we assume that individuals observe their opponents' preferences with probability $p$. We first derive necessary and sufficient conditions for stability for $p=1$ and $p=0$, and then check the robustness of our results against small perturbations on observability for the case of pure-strategy outcomes.