Finance as Extended Biology: Reciprocity as the Cognitive Substrate of Financial Behavior

TL;DR

This paper proposes that reciprocity, a fundamental behavioral principle from early human societies, underpins core financial functions like credit and insurance, offering a new behavioral framework for understanding decentralized financial systems.

Contribution

It introduces a novel perspective that financial behaviors are extensions of reciprocity, emphasizing behavioral computation over institutional design.

Findings

Reciprocity is the foundational logic of early human societies.

Financial functions can be reconstructed as expressions of reciprocity.

A minimal, simulateable model of reciprocal interaction explains financial behaviors.

Abstract

A central challenge in economics and artificial intelligence is explaining how financial behaviors-such as credit, insurance, and trade-emerge without formal institutions. We argue that these functions are not products of institutional design, but structured extensions of a single behavioral substrate: reciprocity. Far from being a derived strategy, reciprocity served as the foundational logic of early human societies-governing the circulation of goods, regulation of obligation, and maintenance of long-term cooperation well before markets, money, or formal rules. Trade, commonly regarded as the origin of financial systems, is reframed here as the canonical form of reciprocity: simultaneous, symmetric, and partner-contingent. Building on this logic, we reconstruct four core financial functions-credit, insurance, token exchange, and investment-as expressions of the same underlying principle under varying conditions. By grounding financial behavior in minimal, simulateable dynamics of reciprocal interaction, this framework shifts the focus from institutional engineering to behavioral computation-offering a new foundation for modeling decentralized financial behavior in both human and artificial agents.