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Monotone Comparative Statics in Games with both Strategic Complements and Strategic Substitutes

Author

Listed:
  • Andrew Monaco

    (Department of Economics, University of Kansas)

  • Tarun Sabarwal

    (Department of Economics, University of Kansas)

Abstract

This paper analyzes games with both strategic substitutes and strategic complements. Such games may behave differently from either games with strategic complements or games with strategic substitutes. In such games, equilibria do not decrease as the parameter increases. Moreover, natural conditions are presented to guarantee that an increase in the parameter leads to an increase in the equilibrium: in other words, conditions to guarantee monotone comparative statics. These conditions are based on intuitive tradeoffs between direct parameter effects and indirect strategic effects. These conditions are needed only for players with strategic substitutes; no conditions are imposed on players with strategic complements. Several examples highlight the results.

Suggested Citation

  • Andrew Monaco & Tarun Sabarwal, 2012. "Monotone Comparative Statics in Games with both Strategic Complements and Strategic Substitutes," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 201236, University of Kansas, Department of Economics, revised Aug 2012.
    • Handle: RePEc:kan:wpaper:201236
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    File URL: http://www2.ku.edu/~kuwpaper/2009Papers/201236.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Lattice games; strategic complements; strategic substitutes; 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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