The optimal foraging strategy in a given environment depends on the number of competing individuals and their behavioural strategies. Little is known about the genes and neural circuits that integrate social information into foraging decisions. Here we show that ascaroside pheromones, small glycolipids that signal population density, suppress exploratory foraging in Caenorhabditis elegans, and that heritable variation in this behaviour generates alternative foraging strategies. We find that natural C. elegans isolates differ in their sensitivity to the potent ascaroside icas#9 (IC-asc-C5). A quantitative trait locus (QTL) regulating icas#9 sensitivity includes srx-43, a G-protein-coupled icas#9 receptor that acts in the ASI class of sensory neurons to suppress exploration. Two ancient haplotypes associated with this QTL confer competitive growth advantages that depend on ascaroside secretion, its detection by srx-43 and the distribution of food. These results suggest that balancing selection at the srx-43 locus generates alternative density-dependent behaviours, fulfilling a prediction of foraging game theory.