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Non-Monotone Comparative Statics in Games of Incomplete Information

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Author Info
Ed Hopkins ()
Tatiana Kornienko

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Abstract

This paper analyses comparative statics for two classes of n-player games of incomplete information with continuous action spaces. The two classes are defined by differences in the payoff and behaviour of the weakest type: the lowest value bidder or highest cost firm. We show that in ``weakly competitive games'', including all-pay auctions and some oligopoly models, weak types will respond to a stochastically higher distribution of types by playing less aggressively. In ``strongly competitive'' games, all types play more aggressively. Furthermore, we show that a decrease in dispersion of types, in the sense of a refinement of second order stochastic dominance, although also associated with an increase in competitiveness, may in addition result in less aggressive play by strong types in both strongly and weakly competitive games.

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Publisher Info
Paper provided by Edinburgh School of Economics, University of Edinburgh in its series ESE Discussion Papers with number 122.

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Length: 21
Date of creation: Sep 2004
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Handle: RePEc:edn:esedps:122

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Related research
Keywords: Monotone likelihood ratio; monotone probability ratio; conditional stochastic dominance; generalized Lorenz order; comparative statics; games of incomplete information; first price auctions.;

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Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Larry Samuelson, 2004. "Information-Based Relative Consumption Effects," Econometrica, Econometric Society, vol. 72(1), pages 93-118, 01. [Downloadable!] (restricted)
  2. Eric Maskin & John Riley, 2003. "Uniqueness of Equilibrium in Sealed High-Bid Auctions," Economics Working Papers 0031, Institute for Advanced Study, School of Social Science. [Downloadable!]
    Other versions:
  3. Lebrun, Bernard, 1998. "Comparative Statics in First Price Auctions," Games and Economic Behavior, Elsevier, vol. 25(1), pages 97-110, October. [Downloadable!] (restricted)
  4. Susan Athey, 2002. "Monotone Comparative Statics Under Uncertainty," The Quarterly Journal of Economics, MIT Press, vol. 117(1), pages 187-223, February. [Downloadable!] (restricted)
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  6. Kagel, John H & Levin, Dan, 1991. "The Winner's Curse and Public Information in Common Value Auctions: Reply," American Economic Review, American Economic Association, vol. 81(1), pages 362-69, March. [Downloadable!] (restricted)
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  7. Maskin, Eric & Riley, John, 2000. "Equilibrium in Sealed High Bid Auctions," Review of Economic Studies, Blackwell Publishing, vol. 67(3), pages 439-54, July.
  8. Kyle Bagwell & Asher Wolinsky, 2002. "Game theory and industrial organization," Discussion Papers 0102-36, Columbia University, Department of Economics. [Downloadable!]
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  9. Maskin, Eric & Riley, John, 2000. "Asymmetric Auctions," Review of Economic Studies, Blackwell Publishing, vol. 67(3), pages 413-38, July.
  10. Ed Hopkins & Tatiana Kornienko, 2004. "Running to Keep in the Same Place: Consumer Choice as a Game of Status," American Economic Review, American Economic Association, vol. 94(4), pages 1085-1107, September. [Downloadable!]
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  11. Varian, Hal R, 1980. "A Model of Sales," American Economic Review, American Economic Association, vol. 70(4), pages 651-59, September. [Downloadable!] (restricted)
  12. Krishna, Vijay & Morgan, John, 1997. "An Analysis of the War of Attrition and the All-Pay Auction," Journal of Economic Theory, Elsevier, vol. 72(2), pages 343-362, February. [Downloadable!] (restricted)
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  13. Jacob K. Goeree & Theo Offerman, 2003. "Competitive Bidding in Auctions with Private and Common Values," Economic Journal, Royal Economic Society, vol. 113(489), pages 598-613, 07. [Downloadable!] (restricted)
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  14. Paul R. Milgrom, 1981. "Good News and Bad News: Representation Theorems and Applications," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 380-391, Autumn. [Downloadable!] (restricted)
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  15. An, Mark Yuying, 1998. "Logconcavity versus Logconvexity: A Complete Characterization," Journal of Economic Theory, Elsevier, vol. 80(2), pages 350-369, June. [Downloadable!] (restricted)
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  16. Ramos, Hector M. & Ollero, Jorge & Sordo, Miguel A., 2000. "A Sufficient Condition for Generalized Lorenz Order," Journal of Economic Theory, Elsevier, vol. 90(2), pages 286-292, February. [Downloadable!] (restricted)
  17. Maskin, Eric S & Riley, John G, 1984. "Optimal Auctions with Risk Averse Buyers," Econometrica, Econometric Society, vol. 52(6), pages 1473-1518, November. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ed Hopkins & Tatiana Kornienko, 2006. "Which Inequality? The Inequality of Resources Versus the Inequality of Rewards," Levine's Bibliography 784828000000000621, UCLA Department of Economics. [Downloadable!]
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