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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 201906, WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS from University of Kansas, Department of Economics

Abstract: Strategic complements are well understood for normal form games, but less so for extensive form games. Indeed, there is some evidence that extensive form games with strategic complemen- tarities are a very restrictive class of games (Echenique (2004)). We explore the extent of this restrictiveness 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 games that exhibit strategic complements (in the sense of increasing best responses) has infinite measure. This enlarges the scope of strategic complements in two stage, 2 × 2 games (and provides a basis for possibly greater scope in more general games). Moreover, the set of subgame perfect Nash equilibria in the larger class of games continues to remain a nonempty, complete lattice.

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)
Pages: 23 pages
Date: 2019-03
New Economics Papers: this item is included in nep-com, nep-gth and nep-mic
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Related works:
Journal Article: Strategic complements in two stage, 2 × 2 games (2020) Downloads
Working Paper: Strategic complements in two stage, 2x2 games (2020) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:kan:wpaper:201906

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