Tipping and Supermodularity

28 Pages Posted: 15 May 2006

See all articles by Geoffrey M. Heal

Geoffrey M. Heal

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Howard Kunreuther

University of Pennsylvania - Operations, Information and Decisions Department; National Bureau of Economic Research (NBER)

Date Written: April 22, 2006

Abstract

We model tipping as a game-theoretic phenomenon and investigate the connection between supermodular games, tipping of equilibria and cascading, and apply the results to issues that arise in the context of homeland security and computer security. We show that tipping and cascading can occur in supermodular games and that increasing differences is a sufficient condition for tipping. Supermodularity and tipping of equilibria are closely related. We relate our results to Schelling's early work on tipping.

Keywords: tipping, security, supermodularity, increasing differences, cascading, interdependence, networks

JEL Classification: C72, D80, H23

Suggested Citation

Heal, Geoffrey M. and Kunreuther, Howard C., Tipping and Supermodularity (April 22, 2006). Available at SSRN: https://ssrn.com/abstract=902260 or http://dx.doi.org/10.2139/ssrn.902260

Geoffrey M. Heal (Contact Author)

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States
212-854-6459 (Phone)
212-316-9219 (Fax)

HOME PAGE: http://www.gsb.columbia.edu/faculty/gheal/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Howard C. Kunreuther

University of Pennsylvania - Operations, Information and Decisions Department ( email )

3730 Walnut Street
558 & 559 Jon M. Huntsman Hall
Philadelphia, PA 19104-5340
United States
212-854-0423 (Phone)
215-573-2130 (Fax)

National Bureau of Economic Research (NBER)

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