We investigate the effects of players' mutual empathy, or the interdependence of players' payoffs, on their behavior and welfare. To this end, we augment the conventional game-theoretic framework by allowing players' utilities to depend not only on the strategy profile being played, but also on...

In this paper, we study the role and impact of workers' empathy — or the interdependence of workers' preferences — on the business cycle. We show how empathy affects managerial practices and how it impacts labor market outcomes such as wages and employment. To this end, we consider a labor...