Paper #546

Título:

On payoff heterogeneity in games with strategic complementarities

Autores:

Antonio Ciccone y James Costain

Data:

Abril 2001

Resumen:

Payoff heterogeneity weakens positive feedback in binary choice models in two ways. First, heterogeneity drives individuals to corners where they are unaffected by strategic complementarities. Second, aggregate behaviour is smoother than individual behaviour when individuals are heterogeneous. However, this smoothing does not necessarily eliminate positive feedback or guarantee a unique equilibrium. In games with an unbounded, continuous choice space, heterogeneity may either weaken or strengthen positive feedback, depending on a simple convexity/concavity condition. We conclude that positive feedback phenomena derived in representative agent models will often be robust to heterogeneity.

Palabras clave:

Heterogeneity, multiplicity, discrete choice, strategic complementarity, positive feedback

Códigos JEL:

C72, E00

Área de investigación:

Microeconomía

Publicado en:

Oxford Economic Papers, 56 (4), 701-713, 2004

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