This article proposes a game-theoretic equilibrium concept promoting endogenous cooperation through self-interested agents optimally choosing how much they care about their opponents’ welfare.
Rationally altruistic equilibria always exist in finite games as long as a publicly observed signal is available. Characterizations of the equilibrium concept highlight that it is most likely to have a bite when players’ interests are sufficiently dissimilar but not diametrically opposed to each other—such as in the prisoner’s dilemma.
In the presence of more than two players, rational altruism can take an opportunistic form and serve as a device of collusion through implicit coalition formation.
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