Supermodular correspondences and comparison of multi-prior beliefs
Pawel Dziewulski () and
John Quah ()
Working Paper Series from Department of Economics, University of Sussex Business School
Economic decisions often involve maximising an objective whose value is itself the outcome of another optimisation problem. This decision structure arises in multi-output production and choice under uncertainty with multi-prior beliefs. To analyse comparative statics in these models, we introduce a theory of Supermodular correspondences. In particular, we employ this theory to generalise the notion of first order stochastic dominance to multi-prior beliefs, allowing us to characterise conditions under which greater optimism leads to higher action.
Keywords: monotone comparative statics; supermodularity; correspondences; stochastic dominance; multi-output production; ambiguity; dynamic programming (search for similar items in EconPapers)
JEL-codes: C61 D21 D24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mic and nep-sea
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Persistent link: https://EconPapers.repec.org/RePEc:sus:susewp:0619
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