Hamilton's rule in economic decision-making

Abstract

Hamilton’s rule [W. D. Hamilton, Am. Nat. 97, 354–356 (1963); W. D. Hamilton, J. Theor. Biol. 7, 17–52 (1964)] quantifies the central evolutionary ideas of inclusive fitness and kin selection into a simple algebraic relationship. Evidence consistent with Hamilton’s rule is found in many animal species. A drawback of investigating Hamilton’s rule in these species is that one can estimate whether a given behavior is consistent with the rule, but a direct examination of the exact cutoff for altruistic behavior predicted by Hamilton is almost impossible. However, to the degree that economic resources confer survival benefits in modern society, Hamilton’s rule may be applicable to economic decision-making, in which case techniques from experimental economics offer a way to determine this cutoff. We employ these techniques to examine whether Hamilton’s rule holds in human decision-making, by measuring the dependence between an experimental subject’s maximal willingness to pay for a gift of $50 to be given to someone else and the genetic relatedness of the subject to the gift’s recipient. We find good agreement with the predictions of Hamilton’s rule. Moreover, regression analysis of the willingness to pay versus genetic relatedness, the number of years living in the same residence, age, and sex shows that almost all the variation is explained by genetic relatedness. Similar but weaker results are obtained from hypothetical questions regarding the maximal risk to her own life that the subject is willing to take in order to save the recipient’s life.

Keywords: Hamilton’s rule; altruism; evolution; experimental economics.

Fig. 1.

Willingness to pay and willingness to take on personal risk as a function of genetic relatedness to the recipient. The diagonal line depicts the predictions of Hamilton’s rule, $C^{*}=rB$. Mean results are reported, with the error bars indicating two SEs. When money is involved (A), the results are very close to the theoretical predictions ($R^2=0.94$), except in the case of identical twins. When the questions are hypothetical (B), the willingness to take risk increases with the genetic relatedness ($R^2=0.87$), but subjects are generally more altruistic than predicted by theory, consistent with the “cheap talk” argument.