The strategic advantage of inequality averse preferences

Abstract

It is usually assumed that the sole purpose of agents is to maximize their own material payoff independently from what other agents receive, and that this yields a strategic advantage in terms of receiving a higher payoff compared to other types of players, if any. On the contrary, it is shown that in certain subclasses of games, players with negatively interdependent preferences have an unambiguous strategic advantage over the independent players (Koçkesen et al., 2000). We analyze a different type of inter- dependency in games; in particular, we analyze games where players with inequality averse preferences have a strategic advantage over the independent players.