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On the Strategic Advantage of Negatively Interdependent Preferences

Levent Koçkesen (), Efe Ok and Rajiv Sethi ()

Game Theory and Information from University Library of Munich, Germany

Abstract: We study certain classes of supermodular and submodular games which are symmetric with respect to material payoffs but in which not all players seek to maximize their material payoffs. Specifically, a subset of players have negatively interdependent preferences and care not only about their own material payoffs but also about their payoffs relative to others. We identify sufficient conditions under which members of the latter group have a strategic advantage in the following sense: at all intragroup symmetric equilibria of the game, they earn strictly higher material payoffs than do players who seek to maximize their material payoffs. We show that these conditions are satisfied by a number of games of economic importance, and discuss the implications of these findings for the evolutionary theory of preference formation and the theory of Cournot competition.

Keywords: Interdependent Preferences; Submodular and Supermodular Games; Relative Profits; Cournot Oligopoly (search for similar items in EconPapers)
JEL-codes: C72 D62 (search for similar items in EconPapers)
Date: 1997-08-04, Revised 1997-08-08
Note: Type of Document - Acrobat PDF; prepared on IBM PC ; to print on HP; pages: 34 ; figures: None
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