This study endogenously generates the asymmetric verification concept of conservatism,using evolutionary biology as a foundation. A producer produces (or hunts) a consumablewith a stochastic production technology, and possibly faces a stealer thereafter, who seeksto expropriate the consumable. The producer, for fear of being perceived as weak, willnever share her output with the stealer, but will launch an all-out fight. This all-or nothinggamble demonstrates the producer's convex utility in losses. On the other hand,the optimal choice in production (or hunting) indicates a concave preference in gains. Theseendogenously derived asymmetric risk-profiles towards gains and losses, when applied tochoice theory, generate a demand for higher verifiability standards for probable gains thanlosses. The model then shows how this preference is modulated by various social andinformational configurations of individuals. Our findings explain observed conservatismpatterns in a variety of institutional settings.
