Andrew Monaco

Bio: Andrew Monaco is an academic researcher from University of Puget Sound. The author has contributed to research in topics: Strategic complements & Monotone comparative statics. The author has an hindex of 2, co-authored 8 publications receiving 42 citations. Previous affiliations of Andrew Monaco include Colgate University & University of Kansas.

Games with strategic complements and substitutes

Abstract: This paper studies games with both strategic substitutes and strategic complements, and more generally, games with strategic heterogeneity (GSH). Such games may behave differently from either games with strategic complements or games with strategic substitutes. Under mild assumptions (on one or two players only), the equilibrium set in a GSH is totally unordered (no two equilibria are comparable in the standard product order). Moreover, under mild assumptions (on one player only), parameterized GSH do not allow decreasing equilibrium selections. In general, this cannot be strengthened to conclude increasing selections. Monotone comparative statics results are presented for games in which some players exhibit strategic substitutes and others exhibit strategic complements. For two-player games with linearly ordered strategy spaces, there is a characterization. More generally, there are sufficient conditions. The conditions apply only to players exhibiting strategic substitutes; no additional conditions are needed for players with strategic complements. Several examples highlight the results.

Monotone Comparative Statics in Games with both Strategic Complements and Strategic Substitutes

Abstract: This paper analyzes games with both strategic substitutes and strategic complements. Such games may behave differently from either games with strategic complements or games with strategic substitutes. In such games, equilibria do not decrease as the parameter increases. Moreover, natural conditions are presented to guarantee that an increase in the parameter leads to an increase in the equilibrium: in other words, conditions to guarantee monotone comparative statics. These conditions are based on intuitive tradeoffs between direct parameter effects and indirect strategic effects. These conditions are needed only for players with strategic substitutes; no conditions are imposed on players with strategic complements. Several examples highlight the results.

Games with Strategic Heterogeneity

Abstract: This paper studies games with both strategic substitutes and strategic complements, and more generally, games with strategic heterogeneity (GSH). Such games may behave differ- ently from either games with strategic complements or games with strategic substitutes. Under mild assumptions (on one or two players only), the equilibrium set in a GSH is totally unordered (no two equilibria are comparable in the standard product order). Moreover, under mild assumptions (on one player only), parameterized GSH do not allow decreasing equilibrium selections. In general, this cannot be strengthened to conclude in- creasing selections. Monotone comparative statics results are presented for games in which some players exhibit strategic substitutes and others exhibit strategic complements. For two-player games with linearly ordered strategy spaces, there is a characterization. More generally, there are sufficient conditions. The conditions apply only to players exhibiting strategic substitutes; no conditions are needed for players with strategic complements. Several examples highlight the results.

Games with Strategic Complements and Substitutes

Abstract: This paper studies games with both strategic substitutes and strategic complements, and more generally, games with strategic heterogeneity (GSH). Such games may behave differently from either games with strategic complements or games with strategic substitutes. Under mild assumptions (on one or two players only), the equilibrium set in a GSH is totally unordered (no two equilibria are comparable in the standard product order). Moreover, under mild assumptions (on one player only), parameterized GSH do not allow decreasing equilibrium selections. In general, this cannot be strengthened to conclude increasing selections. Monotone comparative statics results are presented for games in which some players exhibit strategic substitutes and others exhibit strategic complements. For two-player games with linearly ordered strategy spaces, there is a characterization. More generally, there are sufficient conditions. The conditions apply only to players exhibiting strategic substitutes; no additional conditions are needed for players with strategic complements. Several examples highlight the results.

A non-robustness in the order structure of the equilibrium set in lattice games

Abstract: Monaco, Andrew and Sabarwal, Tarun, (2011), A non-robustness in the order structure of the equilibrium set in lattice games, No 201004, WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS, University of Kansas, Department of Economics.

Levels of Reasoning in Keynesian Beauty Contests: A Generative Framework

Abstract: We introduce a generalization of the Beauty Contest (BC) game as a framework that incorporates different models from micro- and macroeconomics by formulating their reduced forms as special cases of the BC. Examples include public good games, ultimatum games, Bertrand, Cournot, some auctions, asset markets, New-Keynesian, and general equilibrium models with sentiments/animal spirits. This becomes feasible by considering BC specifications with a best response or optimal action as a function of other players' aggregated actions. For characterizing an integrated account of heterogeneity in economics, as observed in BC experiments, we employ a non-equilibrium model, the so-called “level-k” model, based on one (or more) reference point(s) and (limited) iterated best responses. Level-k and related models thus bridge the gap between non-strategic (e.g. irrational, intuitive or random) behavior and equilibrium choices. We also give a brief overview of interactive decision-making within experimental economics, and discuss elicitation methods, cognitive and population measures, to better understand heterogeneity in human reasoning in general, and in economic experiments in particular.

Industrial policy and firm heterogeneity

Abstract: Our concern is about a firm-specific industrial policy. When R&D subsidies or taxes are differentiated among firms, the question arises which firms in an industry should receive such support. We analyse a situation where firms differ in their R&D technologies in two distinct ways: they differ both in the costs of performing R&D activities and in the output obtained from such activities. The introduction of several domestic firms creates a corrective motive for government intervention with the firms' R&D activities in addition to Spencer and Brander's strategic motive. We find that the optimal firm-specific industrial policy is affected differently by the two sources of firm heterogeneity. Moreover, a change in a firm's R&D productivity has an ambiguous effect on the optimal policy towards the firm.

Price competition with differentiated goods and incomplete product awareness

Abstract: We investigate the effects of increased transparency on prices in the Bertrand duopoly model. Market transparency is defined as the proportion of consumers that are fully informed about the market and thus not captive to one firm. We consider two main cases of strategic interaction, prices as strategic complements and as strategic substitutes. For the former class of games, conventional wisdom concerning prices is confirmed, in that they decrease with market transparency. Consumer welfare always increases with higher transparency but changes in firms’ profits are ambiguous. For the latter class of games, an increase in market transparency may lead to an increase in one of the prices, which implies ambiguous effects on both consumer welfare and firms’ profits. An example with linear demand for differentiated products is also investigated. The results of the paper shed light on the mixed evidence concerning the effects of the Internet on retail markets and may illuminate some of the ongoing related public policy debates.

Rationalizability and learning in games with strategic heterogeneity

Abstract: It is shown that in games of strategic heterogeneity (GSH), where both strategic complements and substitutes are present, there exist upper and lower serially undominated strategies which provide a bound for all other rationalizable strategies. By establishing a connection between learning in a repeated setting and the iterated deletion of strictly dominated strategies, we are able to provide necessary and sufficient conditions for dominance solvability and stability of equilibria. As a corollary, it is shown that only unique equilibria can be (globally) stable. Lastly, we provide conditions under which games that do not exhibit monotone best responses can be analyzed as a GSH. Applications to industrial organization, network games, and crime and punishment are given.