A correspondence principle for cooperative differential equations

Kai-Sun Kwong

Journal of Economic Theory, 2014, vol. 150, issue C, 878-887

Abstract: This paper establishes a correspondence principle in a system of cooperative differential equations. Equilibria that are locally asymptotically stable must exhibit monotone comparative statics. In a wider context, all equilibria that exhibit monotone comparative statics are locally asymptotically stable. The orbits of such systems are nondecreasing in the parameter and the adjustment dynamics after a parameter change are monotone and convergent to a unique limit. Our results can be applied to such models as adaptive play in games with strategic complementarities, stochastic fictitious play in supermodular games, and the Matsuyama [6] model of global financial market liberalization with multiple capital goods.

Keywords: Correspondence principle; Monotone comparative statics; Asymptotic stability; Differential equations (search for similar items in EconPapers)
JEL-codes: C61 C62 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:150:y:2014:i:c:p:878-887

DOI: 10.1016/j.jet.2013.10.004

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