Sometimes I play matchmaker. It works out alright, so long as I watch the game and don't leave it unattended. They do get away from me occasionally, though.

Usually I mix and match, going for maximum genetic diversity. In that case I don't allow parent & children or siblings or half-siblings to breed, but everyone else is on the "okay" list. I try never to give my guys any breeding skill. But my ladies will occasionally take the iniative. When they do that I usually go ahead and breed them with who I want them with, so I can control them (because I'll already have fishing by time they get that experienced).

Seems to me they usually go for first adult of the opposite sex in the game file. That's usually the oldest, until you have an elderly die and a kid that took their place turn 18. And that's okay when the females are iniating, but I don't like my nursing mothers to die, because I hate losing the babies.