Mark Richard Leary, Ph.D.is a professor of psychology and neuroscience at Duke University. His research has made significant contributions to the fields of social psychology and personality psychology... (wikipedia)
Negative emotions are often functional. They tell you when things need to change about the environment or yourself.
The paradox about narcissism is that we all have this streak of egotism. Eighty percent of people think they're better than average.
You filter the cues that you get from others through your self-concept.
The more accurate you are about how others perceive you, the better you fare socially. Think of a person who thinks he's really funny but isn't. He interprets polite laughter as genuine laughter, but everyone is on to him and annoyed by him.
Although Western society has emphasized the importance of high self-esteem, the more important thing may be to have self-compassion, the ability to treat oneself kindly in the face of failure, rejection, defeat and other negative events.