"Comparative Statics, Informativeness, and the Interval Dominance Order"
JOHN K.-H. QUAH and BRUNO STRULOVICI
Department of Economics, University of Oxford
We identify a natural way of ordering functions, which we call the interval dominance
order and develop a theory of monotone comparative statics based on this order.
This way of ordering functions is weaker then the standard one based on the single
crossing property (Milgrom and Shannon, 1994) and so our results apply in some settings
where the single crossing property does not hold. For example, they are useful when
examining the comparative statics of optimal stopping time problems. We also show that
certain basic results in statistical decision theory which are important in economics –
specifically, the complete class theorem of Karlin and Rubin (1956) and the results
connected with Lehmann’s (1988) concept of informativeness – generalize to payoff
functions obeying the interval dominance order.
Keywords: single crossing property, interval dominance order, supermodularity,
comparative statics, optimal stopping time, complete class theorem, statistical
decision theory, informativeness
JEL Classification Numbers: C61, D11, D21, F11, G11
JEL Nos: D44, G34, L13