Mercy is compassion or forgiveness directed at someone whom you can hurt or make suffer or are currently hurting.
When someone is being hurt shouting "mercy!" means "I beg you to stop! Please show me mercy". As children we played a game called "mercy". We would hurt eat other somehow until the person couldn't bare it any longer and said "mercy!" to make them stop. (pretty evil game haha)
Since mercy can only be given by those who have the power to do so your suggestion of a "top-down approach" is perhaps relevant. For example in Christianity it is said "god please have mercy on us".
It makes total sense. The reason I came up with this
question is that the other day, someone corrected me
when I translated Kannon (観音) as Goddess of Compassion.
(Usually, Kannon is translated as Goddess of Mercy)
So, I guess Kannon can forgive and have mercy on
people rather than just being compassionate.
Arigato~~~~
P.S.
Your "mercy game" story made me laugh.
My dad used to tickle me until I said Kousan!,
which means surrendered. It's kind of similar, huh?
hehe aaah I see! Sounds like some tricky translation.
It seems not just children, but adults also play that mercy game; I remember some drunk guys playing something similar. They took it in turn to hit each other in the arm until people couldn't take it anymore and gave up. I remember my idiot brother playing that game in the pub. Men! :P