Document Type

Discussion Paper

Publication Date

1-17-2026

CFDP Number

2360R1

CFDP Pages

33

Journal of Economic Literature (JEL) Code(s)

D62

Abstract

Purely affective interaction allows the welfare of an individual to depend only the individual’s own action and on the profile of welfare levels of others. Under an assumption on the structure of mutual affection that we interpret as non-reinforcing mutual affection, we show that equilibria of affective interaction are Pareto optimal. Moreover, if purely affective interaction induces a standard game, then an equilibrium profile of actions is a Nash equilibrium of the induced game, and this Nash equilibrium and Pareto optimal profile of strategies is locally dominant.

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