  We present a model that investigates preference evolution with endogenous
matching. In the short run, individuals' subjective preferences simultaneously
determine who they choose to match with and how they behave in the social
interactions with their matched partners, which result in material payoffs for
them. Material payoffs in turn affect how preferences evolve in the long run.
To properly model the "match-to-interact" process, we combine stable matching
and equilibrium concepts. Our analysis unveils that endogenous matching gives
rise to the "we is greater than me" moral perspective. This perspective is
underpinned by a preference that exhibits both homophily and efficiency, which
enables individuals to reach a consensus of a collective ``we" that transcends
the boundaries of the individual "I" and "you." Such a preference stands out in
the evolutionary process because it is able to force positive assortative
matching and efficient play among individuals carrying the same preference
type. Under incomplete information, a strong form of homophily, which we call
parochialism, is necessary for a preference to prevail in evolution, because
stronger incentives are required to engage in self-sorting with information
friction.
