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Comparative Statics with Never Increasing Correspondences

Author

Listed:
  • Sunanda Roy

    (Drake University)

  • Tarun Sabarwal

    (University of Texas at Austin)

Abstract

This paper studies models where the correspondences (or functions) under consideration are never increasing (or weakly decreasing) in endogenous variables, and weakly increasing in exogenous parameters. Such models include games of strategic substitutes, and include cases where additionally, some variables may be strategic complements. It is shown that the equilibrium set in such models is a non-empty, complete lattice, if, and only if, there is a unique equilibrium. For a given parameter value, a pair of distinct equilibria are never comparable. Moreover, generalizing an existing result, it is shown that when a parameter increases, no new equilibrium is smaller than any old equilibrium. (In particular, in n-player games with real-valued action spaces, symmetric equilibria increase with the parameter.) Furthermore, when functions under consideration are weakly decreasing in endogenous variables, a sufficient condition is presented that guarantees existence of increasing equilibria (symmetric or asymmetric) at a new parameter value. This condition is applied to two classes of examples.

Suggested Citation

  • Sunanda Roy & Tarun Sabarwal, 2005. "Comparative Statics with Never Increasing Correspondences," Game Theory and Information 0505001, University Library of Munich, Germany, revised 21 Oct 2005.
  • Handle: RePEc:wpa:wuwpga:0505001
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    References listed on IDEAS

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    More about this item

    Keywords

    Monotone comparative statics; Non-increasing functions; Never increasing correspondences; strategic substitutes;
    All these keywords.

    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium

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