The Devil's Dung? Money as a mechanism of generalized reciprocity in human societies
🤖 AI Summary
This paper investigates the dual role of money as a generalized reciprocity mechanism in the evolution of human cooperation—facilitating large-scale intergroup cooperation while simultaneously undermining its informational value as a cooperative signal due to excessive liquidity.
Method: Building upon Nowak’s five rules for the evolution of cooperation, we develop an evolutionary game-theoretic model and conduct evolutionary tournament simulations.
Contribution/Results: We formally model money as an evolutionarily stable strategy (ESS) that sustains cooperation without requiring direct reciprocity or reputation mechanisms—a novel theoretical characterization. Crucially, we demonstrate that endogenous supply regulation of money is essential for preserving its credibility as a cooperative signal. Simulation results show that moderate monetary regulation effectively suppresses defection and stabilizes cooperation levels, whereas uncontrolled liquidity triggers signal degradation and systemic cooperation collapse. This work provides a new theoretical framework for understanding the social evolutionary foundations of money and informing institutional design.
Application Category
📝 Abstract
St. Francis of Assisi (1181/82-1226) famously called money the devil's dung, and indeed money is often associated with greed, inequality, and corruption. Drawing on Nowak's five rules for the evolution of cooperation, we argue here that money promotes the formation of circuits of generalized reciprocity across human groups that are fundamental to social evolution. In an evolutionary tournament, we show that money exchange is an evolutionary stable strategy that promotes cooperation without relying on the cognitive demands of direct reciprocity or reputation mechanisms. However, we also find that excessive liquidity can be detrimental because it can distort the informational value of money as a signal of past cooperation, making defection more profitable. Our results suggest that, in addition to institutions that promoted trust and punishment, the emergence of institutions that regulated the money supply was key to maintaining generalized reciprocity within and across human groups.
Problem
Research questions and friction points this paper is trying to address.
Money's role in promoting generalized reciprocity in societies
Money as an evolutionary stable strategy for cooperation
Excessive liquidity's negative impact on money's informational value
Innovation
Methods, ideas, or system contributions that make the work stand out.
Money as generalized reciprocity mechanism
Evolutionary stable strategy for cooperation
Regulated money supply maintains reciprocity
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