Comparative Statics by Adaptive Dynamics and The Correspondence Principle

Federico Echenique

No E00-273, Economics Working Papers from University of California at Berkeley

Abstract: Federico Echenique JEL#: C61, C62, C72, C73 Keywords: Monotone comparative statics, supermodularity, strategic complements, learning, correspondence principle This paper formalizes the relation between comparative statics and the out-of-equilibrium explanation for how a system evolves after a change in parameters. The paper has two main results. First, an increase in an exogenous parameter sets o_ learning dynamics that involve larger values of the endogenous variables. Second, equilibrium selections that are not mono- tone increasing in the exogenous variables must be predicting unstable equilibria. Moreover, under some conditions monotone comparative statics and stability are equivalent. January 2000

Date: 2000-01-01
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Citations: View citations in EconPapers (6)

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Journal Article: Comparative Statics by Adaptive Dynamics and the Correspondence Principle (2002)
Working Paper: Comparative Statics by Adaptive Dynamics and The Correspondence Principle (2000)
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