| 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 evolutionarily
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. |