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Ordinal potentials in smooth games

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  • Christian Ewerhart

Abstract

In the class of smooth non-cooperative games, exact potential games and weighted potential games are known to admit a convenient characterization in terms of cross-derivatives (Monderer and Shapley, 1996a). However, no analogous characterization is known for ordinal potential games. The present paper derives simple necessary conditions for a smooth game to admit an ordinal potential. First, any ordinal potential game must exhibit pairwise strategic complements or substitutes at any interior equilibrium. Second, in games with more than two players, a condition is obtained on the (modified) Jacobian at any interior equilibrium. Taken together, these conditions are shown to correspond to a local analogue of the Monderer-Shapley condition for weighted potential games. We identify two classes of economic games for which our necessary conditions are also sufficient.

Suggested Citation

  • Christian Ewerhart, 2017. "Ordinal potentials in smooth games," ECON - Working Papers 265, Department of Economics - University of Zurich, revised Oct 2019.
    • Handle: RePEc:zur:econwp:265
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    3. Edith Elkind & Abheek Ghosh & Paul W. Goldberg, 2024. "Continuous-Time Best-Response and Related Dynamics in Tullock Contests with Convex Costs," Papers 2402.08541, arXiv.org, revised Oct 2024.

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    More about this item

    Keywords

    Ordinal potentials; smooth games; strategic complements and substitutes; semipositive matrices;
    All these keywords.

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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