Monotone Comparative Statics in Stochastic Games With Increasing Preferences

Abstract

We consider a class of stochastic discounted games with increasing preferences. We first prove existence of extremal Stationary Markov Perfect Equilibria (SMPE) in pure strategies, and we characterize those equilibria as unique fixed points of well-chosen operators. We use this characterization to establish a class of monotone comparative results on those extremal equilibria, using an arbitrary parameter space.