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A Characterization of Strategic Complementarities

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  • Echenique, Federico

Abstract

I characterize games for which there is an order on strategies such that the game has strategic complementarities. I prove that, with some qualifications, games with a unique equilibrium have complementarities if and only if Cournot best-response dynamics has no cycles; and that all games with multiple equilibria have complementarities. This is a negative result because it implies that the predictive power of complementarities alone is very weak. As an application of my results I show that generic 2 X 2 games either have no pure-strategy equilibria, or are GSC.

Suggested Citation

  • Echenique, Federico, 2001. "A Characterization of Strategic Complementarities," Department of Economics, Working Paper Series qt5w13s4z2, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    • Handle: RePEc:cdl:econwp:qt5w13s4z2
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    Cited by:

    1. Rabah Amir, 2005. "Supermodularity and Complementarity in Economics: An Elementary Survey," Southern Economic Journal, John Wiley & Sons, vol. 71(3), pages 636-660, January.

    More about this item

    Keywords

    Strategic complementarities; supermodular games; non-standard analysis; Cournot best-response dynamics;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games

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