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)
    Pages (from-to)1789-1825
    Number of pages37
    JournalJournal of Political Economy
    Volume128
    Issue number5
    DOIs
    StatePublished - May 1 2020

    ASJC Scopus subject areas

    • Economics and Econometrics

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