Interpretation of Anil's Altruistic Indifference Curves in Figure 4.13
Anil's indifference curves in Figure 4.13 are downward-sloping and convex, representing his altruistic preferences. The downward slope shows he is willing to trade some of his own payoff for Bala's, while convexity indicates a preference for balanced outcomes. A crucial aspect for interpreting the graph is that Anil's utility increases as he moves to indifference curves further away from the origin. The steepness of the curves reflects his degree of altruism; less concern for Bala's income would result in steeper curves, potentially altering his strategic choice.
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Ch.4 Strategic interactions and social dilemmas - The Economy 2.0 Microeconomics @ CORE Econ
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An individual's altruistic preferences are represented on a graph. The vertical axis shows their own monetary payoff, and the horizontal axis shows another person's payoff. The individual's indifference curves are downward-sloping, indicating they are willing to sacrifice some of their own payoff to increase the other person's. If this individual becomes less altruistic (that is, they begin to care less about the other person's payoff relative to their own), how will the shape of their indifference curves change?
Consider two individuals, Alex and Ben, whose preferences regarding their own income and another person's income are represented by indifference curves. For both individuals, their own income is on the vertical axis and the other person's income is on the horizontal axis. At any given allocation of income, Alex's indifference curves are significantly flatter than Ben's. What can be concluded about their relative levels of altruism?
Indifference Curves for Pure Self-Interest
An individual's preferences are represented by a set of indifference curves on a graph. The vertical axis measures their own monetary payoff, and the horizontal axis measures the payoff of another person. Initially, the individual is willing to make certain trade-offs between their own and the other person's payoff. Suppose an event occurs that causes the individual to become more altruistic, meaning they now place a higher value on the other person's well-being relative to their own. How will this change in preference affect the shape of their indifference curves at any given point?
Consider a person's altruistic preferences, where their indifference curves are graphed with their own payoff on the vertical axis and another person's payoff on the horizontal axis. The indifference curves are convex, meaning they are bowed inward towards the origin. What does this convexity reveal about the person's preferences regarding the trade-off between their own and the other's payoff?
Comparing Altruistic Choices
Interpreting Altruistic Trade-offs
Impact of Changing Altruism on Optimal Choice
Predicting Choices with Changing Altruism
Evaluating an Altruistic Trade-off