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Changes in risk and strategic interaction

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  • Nocetti, Diego
  • Smith, William T.

Abstract

In this paper we study the comparative statics of Nth degree stochastic dominance shifts in a large class of non-cooperative games. We consider symmetric equilibria as well as asymmetric equilibria in which the risk changes are idiosyncratic and not necessarily of the same stochastic order. Furthermore, we establish conditions for risk changes to produce multiplier effects on equilibrium strategies. Finally, we evaluate the comparative statics of stochastic dominance shifts in supermodular games, which may feature multiple equilibria and non-convex strategy sets.

Suggested Citation

  • Nocetti, Diego & Smith, William T., 2015. "Changes in risk and strategic interaction," Journal of Mathematical Economics, Elsevier, vol. 56(C), pages 37-46.
    • Handle: RePEc:eee:mateco:v:56:y:2015:i:c:p:37-46
    DOI: 10.1016/j.jmateco.2014.12.001
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    2. Diego C. Nocetti, 2016. "Robust Comparative Statics of Risk Changes," Management Science, INFORMS, vol. 62(5), pages 1381-1392, May.

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