Emotional Games

31 Pages Posted: 14 Mar 2012

See all articles by Richard J. Fairchild

Richard J. Fairchild

University of Bath - School of Management

Date Written: March 13, 2012

Abstract

Behavioural economists are increasingly understanding that humans are not completely self-interested or emotionless, but often exhibit “other-regarding” behaviour. We develop a game-theoretic approach in which players gain utility from their own material payoffs, but who also develop empathetic emotions towards each other. David Sally (2001, 2002) argues that reciprocal behaviour may depend on the social context, social interaction, and psychological closeness of the players. Motivated by Sally’s seminal analysis of sympathy games, we develop a two-stage, extended form, empathy model in which players simultaneously choose empathy levels in one stage, and, in a separate stage, make simultaneous strategy choices in a material game. We consider both conscious (strategic/instrumental), and unconscious (innate) empathy (you simply like someone for who they are). We demonstrate that increasing empathy can have positive or negative effects on welfare in equilibrium, and that these equilibria can be crucially affected by whether empathy is formed consciously, or unconsciously. We tentatively term our modelling approach, ‘emotional game theory.’

Keywords: empathy, emotions, game theory

JEL Classification: C72

Suggested Citation

Fairchild, Richard J., Emotional Games (March 13, 2012). Available at SSRN: https://ssrn.com/abstract=2021113 or http://dx.doi.org/10.2139/ssrn.2021113

Richard J. Fairchild (Contact Author)

University of Bath - School of Management ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom
01225 323456 (Phone)
01225 323902 (Fax)

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