Various models have been proposed to explain how patterns of cooperative (between conspecifics) and mutualistic (between different species) interaction can arise and can be maintained. Game theoretical approaches, which began with the application of the Prisoners’ Dilemma paradigm, proved very stimulating, but it has become clear that they fall short in accommodating the complexities of the majority of real-life interactions. Various assumptions and implications of these models are not realistic. Thus cooperative and mutualistic interactions do not often occur in dyadic isolation, but mostly take place in a setting where there are many potential players. This implies that partner choice should be an essential element in models of cooperation. Moreover, the ratio of supply and demand for the commodities that the different parties seek to acquire may vary. Depending on this ratio, there may be competition between potential ‘buyers’ and ‘sellers’. Last but not least, there can be communication between the parties, leading to a process of bartering. These are characteristics which we normally associate with a ‘market’.

Ronald Noë was one of the first to realise the limitations of the game theoretic models which were current when he conducted his studies on coalition formation in savannah baboons. In the first chapter of Part II he reviews the different models which have been proposed and argues that a market approach offers a most appropriate perspective for understanding systems of cooperative and mutualistic interaction.

In the following chapters both theoretical considerations and supportive empirical evidence are presented to show that a market model offers the appropriate framework for studying such exchange systems.

Living in a group is a cooperative strategy. Animals live in groups only if groups yield a net advantage compared to living solitarily. Group living inherently implies competition, however: one's worst rivals in the competition over food or mates are the conspecifics with the same needs and desires. The same is true for human social networks: common interests often go hand in hand with conflicts over the partitioning of utilities or duties. Thus both humans and non-humans are frequently caught in ‘social dilemmas’ and face similar problems: to find the optimal balance between contribution and exploitation and to keep cheaters and free-riders in check. Animals use strategies shaped by selection in the course of evolution when they deal with these challenges. Humans have the alternative option of using their cognitive capacities to plan their strategies rationally.

In the first chapter of Part I Elinor Ostrom, who has her roots in the social sciences, reviews the vast body of empirical as well as theoretical knowledge on the behaviour of humans caught in social dilemmas. She finds that humans tend to behave more cooperatively in social dilemmas than theory would predict. Charles Nunn and Rebecca Lewis look at social dilemmas with the eyes of evolutionary biologists. In this field the emphasis has traditionally been on dyadic interactions. Nunn and Lewis therefore first show how dyadic game theoretical models can be developed into the n-player models that are more meaningful to the study of social dilemmas.

Introduction

Economists think they know how humans ought to behave if only they were smart enough. Biologists have some knowledge of how animals actually do behave. It does not seem a feasible question to ask how animals ought to behave. Yet, there is a conceptual link between normative economic theory and its empirical biological counterpart. Darwinian evolution often creates animal traits that look to an observer as if the animal did care about the economist's advice. Therefore, economic analysis of animal behaviour has become a flourishing field of biological research in which games and markets play an important role. This chapter discusses fundamental concepts in human and animal economics. They are illustrated with examples from both disciplines. Furthermore, it is shown that the facts often do not meet theoretical expectations. Some hints are given as to why this may be so. Theory development in animal and human economics is far from being completed.

Evolutionary adaptation and bounded rationality: are animals better economists than humans?

Classical economic theory based most of its thoughts on the idea that decision makers are rational in the sense of maximising subjective expected utility. Savage (1954) axiomatised this Bayesian approach to decision making and Harsanyi & Selten (1988) explored it further in the game theoretic context of strategic interaction. However, the more the economic notion of rationality had been made precise, the less it seemed adequately to reflect properties of the real world. Rational decision makers are assumed to possess unlimited cognitive and computational power and to solve correctly every mathematical problem in zero time at no cost.

Mating usually involves a bilateral decision of two individuals to accept each other as partners. However, depending on the species and on socio-ecological circumstances, females can differ strongly from males in how choosy they are and what principles govern their choice. In many animal species females are far more choosy than males. Evolutionary explanations of this phenomenon are typically based on the idea that competition for access to mates is stronger in males than in females. This asymmetry seems to be induced by differences in reproductive potential and, ultimately, by differences between eggs and sperm (anisogamy). Now, whenever there is strong choosiness in one sex, it pays the other sex to advertise desired properties and hide the undesired ones. Assuming that different advertisements are indeed compared by potential mating partners, the success of an advertisement will depend on how one's own signal compares to that of the competitors.

This competitive situation creates a mating market where individuals have different market values because they differ in their signalling potential. The higher an individual's market value, the larger its scope for being choosy itself. Therefore, Pawl-owski and Dunbar study the heterosexual human mating market and explore how sensitive individuals are to their own market value. By analysing written advertisements they demonstrate a positive correlation between market value and aspiration level. They also show that, with an interesting exception, advertisers behave as if they know the choice criteria of the opposite sex. This is an important requirement for the mating scene to operate as a market.

The constraints of life force every organism to behave economically. The study of economic behaviour is therefore not limited to ‘economics’. Scientific disciplines that concentrate on other aspects of human behaviour, such as psychology, sociology and anthropology, have to pay close attention to the economic decisions that drive human behaviour. The same is true for biological disciplines in which strategic options of individual organisms play a central role, notably ethology, behavioural ecology and evolutionary ecology. In order to determine in how far a behavioural strategy is ‘economical’, it has to be compared to some ideal norm: the strategy that would yield maximum payoff. In economics this norm is set by the strategy of a hypothetical ‘super-rational’ individual. For most of us the term ‘super-rational’ has a connotation of ‘very intelligent’; a strategy achieved by the use of superior cognitive capacities. Evolutionary biologists have realised, however, that even the dimmest of organisms, such as fungi and flatworms, often use ‘super-rational strategies’, because a process of selection running over a vast number of generations can shape the behaviour of every species to near perfection, as long as the circumstances in which it lives change slow enough compared to the rate of evolution. There lies the common ground between biology and economics: while Adam Smith's human producers and consumers are driven by the ‘invisible hand’ of self-interest, Charles Darwin's living organisms are driven by the selection for maximising individual fitness.

The present volume gives a number of examples of the common grounds on which economics, biology and the social sciences meet.