Preference Evolution under Partner Choice
Ziwei Wang, JIABIN WU*
Building: HEC Montréal - Édifice Hélène-Desmarais
Room: HEC
Date: 2025-05-03 2:30 pm – 3:00 pm
Last modified: 2025-04-19
Abstract
We present a model that investigates preference evolution with endogenous matching. In the short-run, individuals' subjective preferences influence partner selection and behavior in social interactions, which affects their material payoffs. These payoffs, in turn, affect how preferences evolve in the long-run. To properly model the ``match-to-interact'' process, we combine stable matching and equilibrium concepts. Our analysis shows that endogenous matching gives rise to the evolutionary stability of a class of preferences that exhibit both homophily and efficiency. Such preferences stand out in the evolutionary process because they are able to force positive assortative matching and efficient play. Under incomplete information, a strong form of homophily, termed parochialism, is necessary for a preference to prevail in evolution, because stronger incentives are required to engage in self-sorting with information friction.