When your gain is also my gain. A class of strategic models with other-regarding agents

Abstract

This paper explores the role of social preferences in a competitive framework. More precisely, we study other-regarding strategic models where agents show Rawlsian preferences and, therefore, they care about the best interest of the worst-off agent. The representation of preferences proposed is the most appropriate when the utilities of the agents are vector-valued and their components are not compensable but complementary. In these cases, the improvement of the result for each agent has to be reached by simultaneously improving all the components of the vector-valued utility. Depending on the attitude exhibited by the agents with respect to the results of the others, we distinguish different types of agents and relate them with the parameters of the Rawlsian preference function. An analysis of the sets of equilibria in terms of these parameters is presented. Particularly, in the case of two agents, the equilibria for all the values of the parameters are completely described.