Interesting. I note the simulation doesn't have repeated interactions between individuals with memory... Yes, it acknowledges this. "Importantly, our decision to study a one-shot PD framework, where agents have no memory of previous interactions, significantly reduces the cognitive assumptions placed on our agents. A number of simulations have demonstrated how cooperation may emerge in an iterated Prisoner's Dilemma framework, where agents remember the outcomes of previous interactions (Axelrod 1997; Fogel 1993; Sandholm & Crites 1996). We opted for Hammond and Axelrod's (2006) memoryless model because we are interested in ethnocentrism in its most elemental form."
You need memory to implement tit for tat, which is the classical case of something like moral behavior evolving spontaneously.