Games of Love and Hate

22 Pages Posted: 13 Aug 2018

See all articles by Debraj Ray

Debraj Ray

New York University (NYU) - Department of Economics; Autonomous University of Barcelona - Instituto de Analisis Economico (CSIC)

Rajiv Vohra

Brown University - Department of Economics

Date Written: July 01, 2018

Abstract

A game of love and hate is one in which a player’s 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

Ray, Debraj and Vohra, Rajiv, Games of Love and Hate (July 01, 2018). Available at SSRN: https://ssrn.com/abstract=3221111 or http://dx.doi.org/10.2139/ssrn.3221111

Debraj Ray (Contact Author)

New York University (NYU) - Department of Economics ( email )

269 Mercer Street, 7th Floor
New York, NY 10003
United States
212-998-8906 (Phone)
212-995-4186 (Fax)

Autonomous University of Barcelona - Instituto de Analisis Economico (CSIC)

Campus UAB
E-08193 Bellaterra
Spain

Rajiv Vohra

Brown University - Department of Economics ( email )

Box B
Providence, RI 02912
United States
401-863-3030 (Phone)
401-863-1970 (Fax)

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