Conferences at Department of Economics, University of Toronto, Canadian Economic Theory Conference 2019

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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.

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