  Risk aversion is a common behavior universal to humans and animals alike.
Economists have traditionally defined risk preferences by the curvature of the
utility function. Psychologists and behavioral economists also make use of
concepts such as loss aversion and probability weighting to model risk
aversion. Neurophysiological evidence suggests that loss aversion has its
origins in relatively ancient neural circuitries (e.g., ventral striatum).
Could there thus be an evolutionary origin to risk avoidance? We study this
question by evolving strategies that adapt to play the equivalent mean payoff
gamble. We hypothesize that risk aversion in the equivalent mean payoff gamble
is beneficial as an adaptation to living in small groups, and find that a
preference for risk averse strategies only evolves in small populations of less
than 1,000 individuals, while agents exhibit no such strategy preference in
larger populations. Further, we discover that risk aversion can also evolve in
larger populations, but only when the population is segmented into small groups
of around 150 individuals. Finally, we observe that risk aversion only evolves
when the gamble is a rare event that has a large impact on the individual's
fitness. These findings align with earlier reports that humans lived in small
groups for a large portion of their evolutionary history. As such, we suggest
that rare, high-risk, high-payoff events such as mating and mate competition
could have driven the evolution of risk averse behavior in humans living in
small groups.
