TY - JOUR
T1 - Generalized monotonicity analysis
AU - Strulovici, Bruno H.
AU - Weber, Thomas A.
N1 - Funding Information:
We are very grateful to David Greenstreet, Paul Milgrom, John Quah, Kevin Roberts, and an anonymous reviewer for helpful comments and discussion. Support for this research through a Stanford Presidential Research Grant is gratefully acknowledged.
PY - 2010/6
Y1 - 2010/6
N2 - Complex economic models often lack the structure for the application of standard techniques in monotone comparative statics. Generalized monotonicity analysis (GMA) extends the available methods in several directions. First, it provides a way of finding parameter moves that yield monotonicity of model solutions. Second, it allows studying the monotonicity of functions or subsets of variables. Third, GMA naturally provides bounds on the sensitivity of variables to parameter changes. Fourth, GMA may be used to derive conditions under which monotonicity obtains with respect to functions of parameters, corresponding to imposed parameter moves. Fifth, GMA contributes insights into the theory of comparative statics, for example, with respect to dealing with constraints or exploiting additional information about the model structure. Several applications of GMA are presented, including constrained optimization, nonsupermodular games, aggregation, robust inference, and monotone comparative dynamics.
AB - Complex economic models often lack the structure for the application of standard techniques in monotone comparative statics. Generalized monotonicity analysis (GMA) extends the available methods in several directions. First, it provides a way of finding parameter moves that yield monotonicity of model solutions. Second, it allows studying the monotonicity of functions or subsets of variables. Third, GMA naturally provides bounds on the sensitivity of variables to parameter changes. Fourth, GMA may be used to derive conditions under which monotonicity obtains with respect to functions of parameters, corresponding to imposed parameter moves. Fifth, GMA contributes insights into the theory of comparative statics, for example, with respect to dealing with constraints or exploiting additional information about the model structure. Several applications of GMA are presented, including constrained optimization, nonsupermodular games, aggregation, robust inference, and monotone comparative dynamics.
KW - Aggregation
KW - Comparative dynamics
KW - Comparative statics
KW - Monotone comparative statics
KW - Parameter transformation
KW - Parameterized equations
KW - Quantitative monotonicity analysis
KW - Robust inference
KW - Supermodular games
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U2 - 10.1007/s00199-009-0450-4
DO - 10.1007/s00199-009-0450-4
M3 - Article
AN - SCOPUS:77952428074
SN - 0938-2259
VL - 43
SP - 377
EP - 406
JO - Economic Theory
JF - Economic Theory
IS - 3
ER -