Monotone Comparative Statics for Games With Strategic Substitutes

Abstract

Under some conditions, parameterized games with strategic substitutes exhibit monotone comparative statics of equilibria. These conditions relate to a tradeoff between a direct parameter effect and an opposing, indirect strategic substitute effect. If the indirect effect does not dominate the direct effect, monotone comparative statics of equilibria are guaranteed. These conditions are available for best-response functions, differentiable payoff functions, and general payoff functions. Results are extended to correspondences, the analysis applies to asymmetric equilibria, and several examples are provided.Monotone comparative statics, Nonincreasing functions, Strategic substitutes, Parameterized games