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Games of Love and Hate

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  • Debraj Ray
  • Rajiv Vohra

Abstract

A game of love and hate is one in which a playerís payoff is a function of her own action and the payoffs of other players. For each action profile, the associated payoff profile solves an interdependent utility system, and if that solution is bounded and unique for every profile we call the game coherent. Coherent games generate a standard normal form. Our central theorem states that every Nash equilibrium of such a game is Pareto optimal, in sharp contrast to the general prevalence of inefficient equilibria in the presence of externalities. While externalities in our model are restricted to flow only through payoffs there are no other constraints: they could be positive or negative, or of varying sign. We further show that our coherence and continuity requirements are tight.

Suggested Citation

  • Debraj Ray & Rajiv Vohra, 2018. "Games of Love and Hate," Working Papers 2018-8, Brown University, Department of Economics.
    • Handle: RePEc:bro:econwp:2018-8
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    References listed on IDEAS

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    Cited by:

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    2. Jorge Vasquez & Marek Weretka, 2020. "Co-worker altruism and unemployment," GRAPE Working Papers 55, GRAPE Group for Research in Applied Economics.
    3. Yann Bramoullé & Rachel E Kranton, 2022. "Altruism Networks, Income Inequality, and Economic Relations," AMSE Working Papers 2202, Aix-Marseille School of Economics, France.
    4. Jay Simon & Donald Saari & Donald Saari, 2020. "Interdependent Altruistic Preference Models," Decision Analysis, INFORMS, vol. 17(3), pages 189-207, September.
    5. Heifetz, Aviad, 2023. "The non-dismal science of intergenerational affective interactions," Games and Economic Behavior, Elsevier, vol. 140(C), pages 575-584.
    6. Vásquez, Jorge & Weretka, Marek, 2021. "Co-worker altruism and unemployment," Games and Economic Behavior, Elsevier, vol. 130(C), pages 224-239.

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