Games of love and hate

Debraj Ray, Rajiv Vohra

    Research output: Contribution to journalArticle

    Abstract

    A strategic situation with payoff-based externalities is one in which a player’s payoff depends on her own action and others’ payoffs. We place restrictions on the resulting interdependent utility system that generate a standard normal form, referred to as a “game of love and hate.” Our central theorem states that every equilibrium of a game of love and hate is Pareto optimal. While externalities are restricted to flow only through payoffs, there are no other constraints: they could be positive or negative or of varying sign. We examine the philosophical implications of the restrictions that underlie this theorem.

    Original languageEnglish (US)
    JournalJournal of Political Economy
    DOIs
    StateAccepted/In press - Jan 1 2020

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    ASJC Scopus subject areas

    • Economics and Econometrics

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