Supermodular Correspondences and the comparison of multi-prior beliefs
John Quah, Pawel Dziewulski*
Date: 2019-05-05 11:30 am – 12:00 pm
Last modified: 2019-04-14
Abstract
Economic decisions often involve maximising an objective whose value is itself
the outcome of another optimisation problem. This decision structure arises in
multi-output production and choice under uncertainty with multi-prior beliefs. To analyse comparative statics in these models, we introduce a theory of supermodular correspondences. In particular, we employ this theory to generalise the notion of first order stochastic dominance to multi-prior beliefs, allowing us to characterise conditions under which greater optimism leads to higher action.
the outcome of another optimisation problem. This decision structure arises in
multi-output production and choice under uncertainty with multi-prior beliefs. To analyse comparative statics in these models, we introduce a theory of supermodular correspondences. In particular, we employ this theory to generalise the notion of first order stochastic dominance to multi-prior beliefs, allowing us to characterise conditions under which greater optimism leads to higher action.