If Homo Economicus Could Choose His Own Utility Function, Would He Want One with a Conscience? Reply
Abstract
In my model of the evolution of honesty,1 I assumed the existence of a signal-a blush, perhaps-extreme values of which served to identify some individuals as being honest with certainty. Joseph Harrington notes that without this assumption, honest individuals have difficulty invading a population initially dominated by defectors. For readers who do not wish to work through the algebra in his comment, the argument is easily summarized in nontechnical terms. Suppose two honest mutants, A and B, arrive in an uncountably large population consisting entirely of dishonest persons. And suppose that the probability that an honest person exhibits an intense blush is, say, 0.999, while the corresponding probability for everyone else is only 0.001. When A sees an intense blush on the face of B, what will then be his estimate of the probability that B is honest? Assuming that A knows the laws of elementary probability and corrects for the base rate of honest persons in the population, it will be zero. When virtually everyone in the population is dishonest, even a person with an intense blush will be pegged as dishonest, provided that even the smallest fraction of dishonest persons also shows an intense blush. With
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