The strategic advantage of negatively interdependent preferences

We study certain classes of supermodular and submodular games which are sym metric with respect to material payoffs but in which not all players seek t o maximize their material payoffs. Specifically, a subset of players have n egatively interdependent preferences and care not about their own material payoffs but also about their payoffs relative to others. We identify suffic ient conditions under which members of the latter group have a strategic ad vantage in the following sense: at all intragroup symmetric equilibria of t he game, they earn strictly higher material payoffs than do players who see k to maximize their material payoffs. The conditions are satisfied by numbe r of games of economic importance. We discuss the implications of these fin dings for the evolutionary theory of preference formation and the theory of strategic delegation. Journal of Economic Literature Classification Number s: C72, D62. (C) 2000 Academic Press.