Sarcasm is a way of being nasty without leaving a paper trail.

If I say “No dear, of course I don’t mind waiting for you, in fact, sitting out here with the engine running is exactly how I planned to spend this whole afternoon” then the literal meaning of my words leaves me completely blameless despite their clearly understood venom.

This convention had to evolve.  If it didn’t already exist it would be invented. A world without sarcasm would be out of equilibrium.

Because if sarcasm did not exist then I have the following arbitrage opportunity: I can have a private vindictive chuckle by giving my wife that nasty retort without her knowing I was being nasty.  The dramatic irony of that is an added bonus.

That explains the invention of sarcasm.  But it evolves from there.  Once sarcasm comes into existence then the listener learns to recognize it.  This blunts the effect but doesn’t remove it altogether.  Because unless its someone who knows you very well, the listener may know that you are being sarcastic but it will not be common knowledge.  She feels a little less embarrassment about the insult if there is a chance that you don’t know that she knows that you are insulting her, or if there was some higher-order uncertainty.  If instead you had used plain language then the insult would be self-evident.

And even when its your spouse and she is very accustomed to your use of sarcasm, the convention still serves a purpose.  Now you start to use the tone of your voice to add color to the sarcasm.  You can say it in a way that actually softens the insult.  “Dinner was delicious.” A smile helps.

But you can make it even more nasty too.  Because once it becomes common knowledge that you are being sarcastic, the effect is like a piledriver.  She is lifted for the briefest of moments by the literal words and then it’s an even bigger drop from there when she detects the sarcasm and knows that you know that she knows …. that you intentionally set the piledriver in motion.

Sarcasm could be modeled using the tools of psychological game theory.