Non-Monotone Comparative Statics in Games of Incomplete Information

Ed Hopkins and Tatiana Kornienko

Edinburgh School of Economics Discussion Paper Series from Edinburgh School of Economics, University of Edinburgh

Abstract: This paper analyses comparative statics for two classes of n-player games of incomplete information with continuous action spaces. The two classes are defined by differences in the payoff and behaviour of the weakest type: the lowest value bidder or highest cost firm. We show that in "weakly competitive games", including all-pay auctions and some oligopoly models, weak types will respond to a stochastically higher distribution of types by playing less aggressively. In "strongly competitive" games, all types play more aggressively. Furthermore, we show that a decrease in dispersion of types, in the sense of a refinement of second order stochastic dominance, although also associated with an increase in competitiveness, may in addition result in less aggressive play by strong types in both strongly and weakly competitive games.

Keywords: monotone likelihood ratio; monotone probability ratio; conditional stochastic dominance; generalized Lorenz order; comparative statics; games of incomplete information; first price auctions (search for similar items in EconPapers)
JEL-codes: C72 D31 D44 D81 (search for similar items in EconPapers)
Pages: 21
Date: 2004-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Non-Monotone Comparative Statics in Games of Incomplete Information (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:edn:esedps:122

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