This is selected for, even though it's not remotely a net benefit for the group in itself, because it allows stronger individuals to exclude weaker ones from mating.
The evidence is overwhelming that sexual selection results in species that are better adapted to live in our world. The evidence is overwhelming that fighting or otherwise competing for mates is a winning strategy for a broad range of species. What is that overwhelming evidence? It is that the species that exist carry this feature to a very large extent. A moose population or subpopulation could easily have sampled less selective mating, it is unlikely that that natural experiment has not been done probably many times during the species lifetime of antlered competitors. And what is the result of those experiments? 10 point bucks!
Sexual selection is unambiguously good for the group according to the evidence, all the natural experiments out there that not only still carry antlers, but carry pretty big racks.
Just as central planning is better than free economies "in theory," but actually it is only better if you ignore important aspects of reality, non-sexually-competitive meese are only better than the antlered "in theory" where the theory ignores the apparently overwhelming value of sexual selection.
As to exactly how best to torture the metaphor, I think I have abandoned the idea that lying, gaming the system, must occur at a lower rate than does direct communication in order for their to be survival value in communication. I think that reflected a prejudice that lying is "bad" and truth and building things is "good." A prejudice I try to avoid and I think I had been failing. Now that lying is just another adaptation to consider, the complexity of the system could well wind up with a communication system filled with nothing but lies which still served the group. If in no other way, it could be a way for the clever to successfully compete against the beautiful for mates.
I asked this question on IRC before and got some surprising answers.
Suppose, for the sake of argument, you get cryo-preserved and eventually wake up as an upload. Maybe meat->sim transfer ends up being much easier than sim->meat or meat->meat, or something. Further suppose that you are not particularly averse to a digital-only existence, at least not enough to specifically prohibit reviving you if this is the only option. Yet further suppose that sim-you is identical to meat-you for all purposes that meat-you cared about (including all your hidden desires and character faults). Let's also preemptively assume that any other attempts to fight this hypothetical have been satisfactorily resolved, just to get this out of the way.
Now, in the "real world", or at least in the simulation level we are at, there is no evidence that telepathy of any kind exists or is even possible. However, in the sim-world there is no technological reason it cannot be implemented in some way, for just thoughts, or just feelings, or both. There is a lot to be said for having this kind of connection between people (or sims). It gets rid of or marginalizes deception, status games, mis-communication-based biases and fallacies. On the other hand, your privacy disappears completely and so do any advantages over others the meat-you might want to retain in the digital world. And what you perceive as your faults are out there for everyone to see and feel.
As a new upload, you are informed that many "people" decided to get integrated into the telepathic society and appear to be happy about it, with few, if any, defections. There is also the group of those who opted out, and it looks basically like your "normal" mundane human society. There is only a limited and strictly monitored interaction between the two worlds to prevent exploitation/manipulation.
Would you choose to get fully integrated or stay as human-like as possible? Feel free to suggest any other alternative (suicide, start a partially integrated society, etc.).
P.S. This topic has been rather extensively covered in science fiction, but I could not find a quality online discussion anywhere.