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Affective interdependence and welfare

Author

Listed:
  • Heifetz, Aviad

    (Open University Tel Aviv)

  • Minelli, Enrico

    (University of Brescia)

  • Polemarchakis, Herakles

    (University of Warwick)

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 nonexplosive 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 dominan

Suggested Citation

  • Heifetz, Aviad & Minelli, Enrico & Polemarchakis, Herakles, 2023. "Affective interdependence and welfare," The Warwick Economics Research Paper Series (TWERPS) 1450, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:1450
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    References listed on IDEAS

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    6. Pradeep Dubey, 1986. "Inefficiency of Nash Equilibria," Mathematics of Operations Research, INFORMS, vol. 11(1), pages 1-8, February.
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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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    More about this item

    Keywords

    purely affective interactions ; Pareto optimality JEL codes: D62;

    JEL classification:

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

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