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Supermodularity and Tipping

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  • Geoffrey Heal
  • Howard Kunreuther

Abstract

We model tipping as a game-theoretic phenomenon and investigate the connection between supermodular games, tipping of equilibria and cascading, and apply the results to issues that arise in the context of homeland security and computer security. We show that tipping and cascading can occur in supermodular games and that "increasing differences" is a sufficient condition for tipping. Supermodularity and tipping of equilibria are closely related. We relate our results to Schelling's early work on tipping.

Suggested Citation

  • Geoffrey Heal & Howard Kunreuther, 2006. "Supermodularity and Tipping," NBER Working Papers 12281, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:12281
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    References listed on IDEAS

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    1. Geoffrey Heal & Howard Kunreuther, 2005. "IDS Models of Airline Security," Journal of Conflict Resolution, Peace Science Society (International), vol. 49(2), pages 201-217, April.
    2. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
    3. Crawford, Vincent P & Haller, Hans, 1990. "Learning How to Cooperate: Optimal Play in Repeated Coordination Games," Econometrica, Econometric Society, vol. 58(3), pages 571-595, May.
    4. Kunreuther, Howard & Heal, Geoffrey, 2003. "Interdependent Security," Journal of Risk and Uncertainty, Springer, vol. 26(2-3), pages 231-249, March-May.
    5. Schelling, Thomas C, 1969. "Models of Segregation," American Economic Review, American Economic Association, vol. 59(2), pages 488-493, May.
    6. Milgrom, Paul & Roberts, John, 1990. "Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities," Econometrica, Econometric Society, vol. 58(6), pages 1255-1277, November.
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    Cited by:

    1. Haoning Chen & Miaomiao Dong & Marc Henry & Ivan Sidorov, 2020. "Occupational segregation in a Roy model with composition preferences," Papers 2012.04485, arXiv.org, revised Sep 2024.
    2. Geoffrey Heal & Howard Kunreuther, 2007. "Modeling Interdependent Risks," Risk Analysis, John Wiley & Sons, vol. 27(3), pages 621-634, June.
    3. Thomas B. Singh, 2012. "A social interactions perspective on trust and its determinants," Journal of Trust Research, Taylor & Francis Journals, vol. 2(2), pages 107-135, February.

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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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