Games of Love and Hate

Debraj Ray and Rajiv Vohra

Journal of Political Economy, 2020, vol. 128, issue 5, 1789 - 1825

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.

Date: 2020
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Working Paper: Games of Love and Hate (2018)
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