<p>The self-prioritization effect refers to the tendency for individuals to perceive self-related stimuli more accurately than other-related stimuli. We leveraged this phenomenon to investigate the mechanisms underlying empathy. According to the self–other merging hypothesis, empathy broadens self-representation to encompass others, predicting a reduced self-prioritization effect. In contrast, the self–other distinction hypothesis posits that empathy heightens the differentiation between self and other, predicting an increased self-prioritization effect. To test these competing hypotheses, we employed a perceptual task combined with electroencephalogram (EEG) recordings, and analyzed the data by using signal detection theory. Fifty-two participants aged 19 to 33&#xa0;years were randomly assigned to either a high-empathy or low-empathy group. Participants listened to an interview and were instructed to either empathize with or remain neutral toward the interviewee. Subsequently, they completed a shape–label matching task using geometrical shapes associated with the self, the interviewer, and the interviewee. The self-prioritization effect was measured by performance differences between self-related and other-related stimuli. Different performance indices provided support for each hypothesis. Specifically, the patterns observed in the sensitivity index (<i>d’</i>) and the lateral positive component (LPC) of the event-related potential supported the self–other distinction hypothesis at the perceptual and attentional levels. In contrast, the patterns in the response bias index <i>(c)</i> and reaction time supported the self–other merging hypothesis at the response level. These findings suggest that empathy influences self-representation in distinct ways across different levels of processing.</p>