Theory - Rabah Amir
Wed, February 20, 2013 • 3:30 PM - 5:00 PM • BRB 1.118
University of Arizona
On the Comparative Statics of Equilibrium Points
The proposal proposes a methodology for comparing pure-strategy Nash equilibrium actions in strategic games. The basic question is, when do upward shifts in reaction correspondences lead to higher equilibrium actions for all players? While the methodology relies on the properties of supermodular games, the games whose equilibrium actions are to be compared need not themselves be supermodular. The prototypical setting could be a family of games with parameter-dependent payoffs or just a pair of related games. The latter is crucial when one wishes to use this approach to compare Nash vs Stackelberg equilibria or Pareto optima vs Nash equilibria, of the same game. The results are illustrated by invoking some well-known economic applications.