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Affective interdependence and welfare

Author

Listed:
  • Aviad Heifetz
  • Enrico Minelli
  • Herakles Polemarchakis

Abstract

Purely affective interaction allows the welfare of an individual to depend on her own actions and on the profile of welfare levels of others. Under an assumption on the structure of mutual affection that we interpret as "non-explosive mutual affection," we show that equilibria of simultaneous-move affective interaction are Pareto optimal independently of whether or not an induced standard game exists. Moreover, if purely affective interaction induces a standard game, then an equilibrium profile of actions is a Nash equilibrium of the game, and this Nash equilibrium and Pareto optimal profile of strategies is locally dominant.

Suggested Citation

  • Aviad Heifetz & Enrico Minelli & Herakles Polemarchakis, 2023. "Affective interdependence and welfare," Papers 2305.10165, arXiv.org.
    • Handle: RePEc:arx:papers:2305.10165
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    References listed on IDEAS

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    Cited by:

    1. Heifetz, Aviad, 2023. "The non-dismal science of intergenerational affective interactions," Games and Economic Behavior, Elsevier, vol. 140(C), pages 575-584.

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    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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