-Methods that use outgroups in the reconstruction of phylogeny are described and evaluated by the criterion of parsimony. By considering the character states and relationships of outgroups, one can estimate the states ancestral for a study group or ingroup, even when several character states are found among the outgroups. Algorithms and rules are presented that find the most parsimonious estimates of ancestral states for binary and multistate characters when outgroup relationships are well resolved. Other rules indicate the extent to which uincertainty about outgroup relationships leads to uncertainty about the ancestral states. The algorithms and rules are based on "simple parsimony" in that convergences and reversals are counted equally. After parsimony is measured locally among the outgroups to estimate ancestral states, parsimony is measured locally within the ingroup, given the ancestral states, to find the ingroup cladogram. This two-step procedure is shown to find the ingroup cladograms that are most parsimonious globally; that is, most parsimonious when parsimony is measured simultaneously over the ingroup and outgroups. However, the two-step procedure is guaranteed to achieve global parsimony only when: (a) outgroup relationships are sufficiently resolved beforehand; (b) outgroup analysis is taken to indicate the state not in the most recent common ancestor of the ingroup, but in a more distant ancestor; and (c) ancestral states are considered while the ingroup is being resolved, not merely added afterward to root an unrooted network. The criterion of global parsimony is then applied to evaluate procedures used when outgroup relationships are poorly resolved. The procedure that chooses as ancestral the state occurring most commonly among the outgroups can sometimes yield cladograms that are not globally parsimonious. By the criterion of global parsimony, the best procedure is one that simultaneously resolves the outgroups and ingroup with the data at hand. Finally, simple parsimony can choose among competing hypotheses, but it often fails to indicate how much confidence can be placed in that choice. [Phylogeny reconstruction; cladistic methods; outgroup analysis; character polarity; parsimony.] This paper explores the use of outgroup analysis in phylogeny reconstruction. When reconstructing a phylogeny, a systematist asks: Given a group of organisms (the ingroup), what are the monophyletic subgroups? If the members of a subgroup share a character state that is derived within the group, the monophyly of this subgroup is corroborated (Hennig, 1966; Wiley, 1975). Hence, systematists attempting to infer phylogenies have sought methods for determining whether a given character state is derived (apomorphic) or ancestral (plesiomorphic). Many methods for assessing the evolutionary polarity of characters have been proposed, including outgroup analysis, ingroup analysis, the ontogenetic method, and the paleontological method. These approaches have been reviewed recently by Crisci and Stuessy (1980), de Jong (1980), Stevens (1980), Arnold (1981), Nelson and Platnick (1981), and others. The methods perhaps most widely accepted today are outgroup analysis and the ontogenetic method, the relative merits of which are still being debated (contrast Nelson [1978] and Patterson [1982] with Lundberg [1973], Wheeler [1981] and Voorzanger and van der Steen [1982]). In its simplest form, outgroup analysis can be summarized by the following rule (Watrous and Wheeler, 1981): For a given character with two or more states within a group, the state occurring in related groups is assumed to be the plesiomorphic state. This rule is inadequate, however, when characters vary among the related groups (the outgroups). Arnold (1981) and Farris (1982) have dealt with some cases of
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