Cognitive Biases and the Evolutionary Origins of Zero-Sum Norms

Isaak Mengesha, Meiqi Sun and Debraj Roy

Papers from arXiv.org

Abstract: Why do maladaptive perceptions and norms, such as zero-sum interpretations of interaction, persist even when they undermine cooperation and investment? We develop a framework where bounded rationality and heterogeneous cognitive biases shape the evolutionary dynamics of norm coordination. Extending evolutionary game theory with quantal response equilibria and prospect-theoretic utility, we show that subjective evaluation of payoffs systematically alters population-level equilibrium selection, generating stable but inefficient attractors. Counterintuitively, our analysis demonstrates that the benefit of rationality and the cost of risk aversion on welfare behave in nonmonotone ways: intermediate precision enhances coordination, while excessive precision or strong loss aversion leads to persistent lock-in at low-payoff and zero-sum equilibria. These dynamics produce an endogenous equity-efficiency trade-off: parameter configurations that raise aggregate welfare also increase inequality, while more equal distributions are associated with lower efficiency. The results highlight how distorted payoff perceptions can anchor societies in divergent institutional trajectories, offering a behavioral-evolutionary explanation for persistent zero-sum norms and inequality.

Date: 2025-11
New Economics Papers: this item is included in nep-gth, nep-mic and nep-neu
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2511.16453

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