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Games with Strategic Heterogeneity

Author

Listed:
  • Andrew Monaco

    (Department of Economics, Colgate University)

  • Tarun Sabarwal

    (Department of Economics, University of Kansas)

Abstract

This paper studies games with both strategic substitutes and strategic complements, and more generally, games with strategic heterogeneity (GSH). Such games may behave differ- ently from either games with strategic complements or games with strategic substitutes. Under mild assumptions (on one or two players only), the equilibrium set in a GSH is totally unordered (no two equilibria are comparable in the standard product order). Moreover, under mild assumptions (on one player only), parameterized GSH do not allow decreasing equilibrium selections. In general, this cannot be strengthened to conclude in- creasing selections. Monotone comparative statics results are presented for games in which some players exhibit strategic substitutes and others exhibit strategic complements. For two-player games with linearly ordered strategy spaces, there is a characterization. More generally, there are sufficient conditions. The conditions apply only to players exhibiting strategic substitutes; no conditions are needed for players with strategic complements. Several examples highlight the results.

Suggested Citation

  • Andrew Monaco & Tarun Sabarwal, 2012. "Games with Strategic Heterogeneity," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 201240, University of Kansas, Department of Economics, revised Nov 2012.
    • Handle: RePEc:kan:wpaper:201240
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    File URL: http://www2.ku.edu/~kuwpaper/2009Papers/201240.pdf
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    References listed on IDEAS

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    Cited by:

    1. Hoffmann, Eric J. & Sabarwal, Tarun, 2015. "A global game with strategic substitutes and complements: Comment," Games and Economic Behavior, Elsevier, vol. 94(C), pages 188-190.

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    More about this item

    Keywords

    Lattice games; strategic complements; strategic substitutes; strategic hetergeneity; equilibrium set; monotone comparative statics;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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