mcs notes for comparative statics

mcs notes for comparative statics - Monotone Comparative...

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Monotone Comparative Statics for Models of Politics Scott Ashworth Princeton University Ethan Bueno de Mesquita Washington University We elucidate a powerful yet simple method for deriving comparative statics conclusions for a wide variety of models: Monotone Comparative Statics (Milgrom and Shannon 1994). Monotone comparative static methods allow researchers to extract robust, substantive empirical implications from formal models that can be tested using ordinal data and simple nonparametric tests. When these methods apply, they can replace a diverse range of more technically difFcult mathematics (facilitating richer, more realistic models), assumptions that are hard to understand or justify substantively (highlighting the political intuitions underlying a model’s results), and a complicated set of methods for extracting implications from models. We present an accessible introduction to the central monotone comparative statics results and a series of practical tools for using these techniques in applied models (with reference to original sources, when relevant). Throughout we demonstrate the techniques with examples drawn from political science. F ormal theorists typically base the testable predic- tions of their models on comparative statics—the analysis of how changes in the parameters of a model affect the model’s solution. For instance, within alegislative-institutional equilibrium a researcher might ask what happens to the cohesiveness of party votes when the competitiveness of elections increases. Similarly, in a model of judicial politics an analyst might want to pre- dict how the level of deference to precedent changes with the independence of the judiciary. Despite the central- ity of this approach, Cameron and Morton (2002) point out that no textbook for political scientists discusses any general techniques for finding comparative statics. In this article we elucidate a powerful yet simple method for de- riving comparative statics conclusions for a wide variety of models. This approach is known as Monotone Compar- ative Statics (Milgrom and Shannon 1994). The tools associated with monotone comparative statics offer several advantages over other techniques, making them invaluable to scholars interested in solving or testing applied formal models. Indeed, as will become clear throughout this article, an understanding of the ba- sics of monotone comparative statics will allow applied researchers to solve and deduce testable implications from awide array of substantive models that would otherwise Scott Ashworth is assistant professor of politics, Princeton University, 130 Corwin Hall, Princeton NJ 08544 ([email protected]). Ethan Bueno de Mesquita is assistant professor of political science, Campus Box 1063, Washington University, One Brookings Dr., St. Louis MO 63130 ([email protected]).
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This note was uploaded on 01/07/2012 for the course ECON 6090 at Cornell University (Engineering School).

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mcs notes for comparative statics - Monotone Comparative...

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