Question regarding: If you don't know the name of the game, just tell me what I mean to you
I've been thinking about what it means to prefer that someone else achieve their preferences. In particular, what happens if you and I both prefer to adopt and chase after each other's preferences to some extent. This has clear good points, like cooperating and making more resources more fungible and thus probably being more efficient and achieving more preferences overall, and clear failure modes, like "What do you want to do? -- I don't know, I want to do whatever you want to do. Repeat."
My first thought: okay, simple, I'll just define my utility function U' to be U + aV where U was my previous utility function and V is your utility function and a is an appropriate scaling factor as per Stuart's post and then I can follow U'!1
This has a couple problems. First, if you're also trying to change your actions based on what I want, there's a circular reference issue. Second, U already contains part of V by definition, or something2.
My second thought: Fine, first we'll both factor our preferences into U = U1 + aV where U1 is my preference without regards to what you want. (Yours is V = V1 + bU) Basically what I want to say is "What do you want to do, 'cause ignoring you I want burgers a bit more than Italian, which I want significantly more than sandwiches from home" and then you could say "well ignoring you I want sandwiches more than Italian more than burgers but it's not a big thing, so since you mean b to me, let's do Italian". It's that "ignoring you" bit that I don't know how to correctly intuit. And by intuit I mean put into math.
Assuming it means something coherent to factor U into U1 + aV, there's still a problem. Watch what happens when we remove the self-reference. First scale U and V to something you and I can agree is approximately fungible. Maybe marginal hours, maybe marginal dollars, whatever. Now U = U1 + a(V1 + bU), so U - abU = U1 + aV1 and as long as ab<1, you can maximize U by maximizing U1 + aV1. Which sounds great, except that my intuition screams that maximizing U should depend on b. So what's up there? My guess is that somewhere I snuck a dependence on b into a...
(I like that the ab<1 constraint appears... intuitively I think it should mean that if we both try to care too much about what the other person wants, neither of us will get anywhere making a decision. "I don't know, what do you want to do?" In general if no one ever lets a>=1 then things should converge.)
I feel like the obvious next step is to list some simple outcomes and play pretend with two people trying to care about each other and fake-elicit their preferences and translate that into utility functions and just check to see how those functions factor. But I've felt like that for a week and haven't done it yet, so here's what I've got.
1Of course I know humans don't work like this, I just want the math.
2"Or something" means I have an idea that sounds maybe right but it's pretty hand-wavy and maybe completely wrong and I certainly can't or don't want to formalize it.
Your condition ab<1 is incomplete; you appear to be implicitly assuming a constant b.
Consider the equation:
U - abU = U1 + aV1
Therefore, U(1 - ab) = U1 + aV1
Now consider holding U1, V1 and a constant and changing b (but keeping to ab<1). Since U1, V1 and a are constant, the product U(1-ab) is constant. Thus, U and (1-ab) are inversely proportional; a decrease in the value of (1-ab) results in an increase in the value of U. A decrease in (1-ab) is caused by an increase in b.
Thus, an increase in b results in an increase in U. This goes to infinity the closer ab gets to 1; that is, the closer b gets to 1/a.
As a general strategy, picking random values for all-but-one variable and using some graphing software, like gnuplot, to plot the effects of the last variable will generally help to visualise this sort of thing.