Comparative Statics, Informativeness, and the Interval Dominance Order

We identify a new way to order functions, called the interval dominance order, that generalizes both the single crossing property and a standard condition used in statistical decision theory. This allows us to provide a unified treatment of the major theorems on monotone comparative statics with and...

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Bibliographic Details
Published in:Econometrica 2009-11, Vol.77 (6), p.1949-1992
Main Authors: Quah, John K.-H., Strulovici, Bruno
Format: Article
Language:English
Subjects:
Applications
Atoms
Bayesian analysis
capital deepening
Capital stocks
Comparative analysis
comparative statics
complete class theorem
Decision theory
Economic theory
Exact sciences and technology
Expected utility
Increasing functions
informativeness
Insurance, economics, finance
interval dominance order
Investors
Local maximum
Mathematical functions
Mathematical models
Mathematics
optimal stopping time
Probability and statistics
Probability theory and stochastic processes
Sciences and techniques of general use
Sequential methods
Single crossing property
statistical decision theory
Statistical theories
Statistics
Stochastic processes
Stopping distances
Studies
supermodularity
Uncertainty
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Summary:We identify a new way to order functions, called the interval dominance order, that generalizes both the single crossing property and a standard condition used in statistical decision theory. This allows us to provide a unified treatment of the major theorems on monotone comparative statics with and without uncertainty, the comparison of signal informativeness, and a non-Bayesian theorem on the completeness of increasing decision rules. We illustrate the concept and results with various applications, including an application to optimal stopping time problems where the single crossing property is typically violated.
ISSN:0012-9682
1468-0262
DOI:10.3982/ECTA7583