Psych student here, some relevant concepts:
- Need for cognitive closure. Trait theorized to be "the shortage of "RAM" / working memory" - i.e. high need for closure means your brain can't endure uncertainty for a long time and needs to make conclusions quickly. The trait is associated with authoritarianism (RWA), because authoritarians
a) like clear rules and categories (incl. categories of people - Tajfel & Turner - social identity theory)
b) don't have motivation/mental energy to reflect on biases (use System 1 heuristics more - e.g. the illusory correlation, ingroup-serving biases)
- Categorical perception. The stereotype content model says we're evolved to categorize people as good/bad and competent/incompetent because of game theory
- fundamental attribution error - tendency to conclude when someone else does a bad thing, they are a bad person, while I, the protagonist of life, do bad things because of bad circumstances. This also works on group-level (ultimate attribution error), related effects: out-group homogeneity bias x in-group differentiation.
- I think there's a deep psychological structure underneath the phenomenon [predictive processing framework]: We encode value in a rather binary system (e.g. Arnold - appraisal theory) - when action has results which are better than expected, dopamine releases, strengthening the neural connections that activate given behavior, upon the same stimuli.

I love the idea behind this market! A closely related thought resonated in me in the past few days, after I've seen Hamilton: "The same person can act both heroically and disgracefully, humans aren't a stable, coherent algorithm."

I have never formally studied philosophy or psychology, but here is my layman take on the questions you mention:

1 - My instinct is that the roots of moral breadth are more in religious/ideological upbringing and surroundings rather than individual psychology e.g. someone raised to have faith in a fundamentalist religion that puts emphasis on dividing people into sinners and believers will likely be very morally narrow, whereas someone raised to believe in nuanced secular utilitarianism is much more likely to end up with moral breadth.

In the field of psychology, this sounds similar to "black and white thinking", which is a common cognitive distortion as well as one of the traits that characterizes Borderline Personality Disorder. Black and white thinking implies you see people/situations/your life etc. as either completely bad or completely good. With respect to other people, this implies you either demonize them as evil or idealize them, without ever grasping that they're complex people, capable of both good and evil. With BPD sufferers in particular, this leads them to get closely attached to people extremely quickly, with an equally rapid breakdown of the relationship once their view of the other person shifts into the negative. I would hesitate to call this a moral failing, especially in people who haven't been diagnosed. I think lack of "moral breadth" crosses into immorality when it's done on purpose. For example sometimes when reading Internet arguments you get the impression that people are misunderstanding each other's points of view on purpose, just to give an uncharitable interpretation of their opponent's opinions.

To me, lack of "moral breadth" seems mainly caused by immaturity. Another cause could be a sense of entitlement - when you have the idea that people should behave a certain way, a conflicting behavior can seem like an evil people are purposefully inflicting upon you.

Moral breadth, as presented, is a familiar line of reasoning in contraposition to one of my primary writing topics: Cynicism.

Perhaps one of many possible reasonings to blind oneself to moral breadth, cynicism can reach a kind of critical mass by which it is rational at the individual level to presume and perceive a self-interested tilt to others' actions. This effectively desensitizes us to effort and embellishes the importance of results. As both an insight and a strategy, it only becomes more true the higher the saturation of cynics in a given community. It creates a vicious cycle when the presumption is that others are desensitized to our own efforts, reducing part of the motivational lubrication of searching for mutual benefit.

Moral breadth would allow self-interest as a motivational catalyst, an intentional "rounding error" whereby mutual benefit is boosted into action over the presumed alternative of inaction, despite failing the "purity tests" tacitly prescribed to cynics by cynical communities. "If no one else is REALLY trying, then why should I?" can feel like a warm blanket, but there is little respite should the sanctuary find itself overcrowded.