Robust Comparative Statics of Non-monotone Shocks in Large Aggregative Games
A policy change that involves redistribution of income or wealth is typically controversial, affecting some people positively but others negatively. In this paper we extend the "robust comparative statics" result on large aggregative games established by Acemoglu and Jensen (2010, 49th IEEE Conference on Decision and Control, 3133-3139) to possibly controversial policy changes. In particular, we show that both the smallest and the largest equilibrium values of an aggregate variable increase in response to a policy change to which individuals' reactions may be mixed but the overall aggregate response is positive. We provide sufficient conditions for such a policy change in terms of distributional changes in parameters.
Large aggregative games, Robust comparative statics, Positive shocks, Stochastic dominance, Mean-preserving spreads
Centre National de la Recherche Scientifique(CNRS)
Université Paris 1 Panthéon-Sorbonne, France
Research Institute for Economics and Business Administration,
Rokkodai-cho, Nada-ku, Kobe
Department of Economics, Bilkent University, Turkey