One explanation of altruism is that it arises from "mentalizing",
the process of understanding the mental states of others. Another
is based on sexual selection: altruism is a costly signal of good
genes. This paper shows that these two arguments are stronger
together in that altruists who can mentalize have a greater ad-
vantage over non-altruists when they can signal their type, even
though these signals are costly, when such signalling allows better
matching opportunities. Finally, it shown how mentalizing leads to
higher payoffs for both partners in a long-term relationship, modeled as a repeated game with private monitoring.
"Competitive Altruism, Mentalizing, and Signaling."
American Economic Journal: Microeconomics,
Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
Asymmetric and Private Information; Mechanism Design