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Strategic Complements in Two Stage, 2 × 2 Games

Yue Feng and Tarun Sabarwal ()
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Yue Feng: Department of Economics, The University of Kansas

No 201801, WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS from University of Kansas, Department of Economics

Abstract: Echenique (2004) concludes that extensive form games with strategic complementarities are a very restrictive class of games. In the context of two stage, 2 × 2 games, we find that the restrictiveness imposed by quasisupermodularity and single crossing property is particularly severe, in the sense that the set of games in which payoffs satisfy these conditions has measure zero. In contrast, the set of such games that exhibit strategic complements (in the sense of increasing best responses) has infinite measure. Our characterization allows one to write uncountably many examples of two stage, 2 × 2 games with strategic complements. The results show a need to go beyond a direct application of quasisupermodularity and single crossing property to define strategic complements in extensive form games.

Keywords: Strategic complements; extensive form game; two stage game (search for similar items in EconPapers)
JEL-codes: C61 C70 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-gth
Date: 2018-02
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