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On extensive form implementation of contracts in differential information economies

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Author Info

  • Dionysius Glycopantis
  • Allan Muir
  • Nicholas C. Yannelis
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    Abstract

    In the context of differential information economies, with and without free disposal, we consider the concepts of Radner equilibrium, rational expectations equilibrium, private core, weak fine core and weak fine value. We look into the possible implementation of these concepts as perfect Bayesian or sequential equilibria of noncooperative dynamic formulations. We construct relevant game trees which indicate the sequence of decisions and the information sets, and explain the rules for calculating ex ante expected payoffs. The possibility of implementing an allocation is related to whether or not it is incentive compatible. Implementation through an exogenous third party or an endogenous intermediary is also considered. Copyright Springer-Verlag Berlin Heidelberg 2003

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    File URL: http://hdl.handle.net/10.1007/s00199-002-0299-2
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    Bibliographic Info

    Article provided by Springer in its journal Economic Theory.

    Volume (Year): 21 (2003)
    Issue (Month): 2 (03)
    Pages: 495-526

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    Handle: RePEc:spr:joecth:v:21:y:2003:i:2:p:495-526

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    Related research

    Keywords: Keywords and Phrases: Differential information economy; Private core; Radner equilibrium; Rational expectations equilibrium; Weak fine core; Weak fine value; Free disposal; Coalitional Bayesian incentive compatibility; Game trees; Perfect Bayesian equilibrium; Sequential equilibrium; Contracts.; JEL Classification Numbers: 020; 226.;

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    Cited by:
    1. Carlos Hervés-Beloso & V. Martins-da-Rocha & Paulo Monteiro, 2009. "Equilibrium theory with asymmetric information and infinitely many states," Economic Theory, Springer, vol. 38(2), pages 295-320, February.
    2. Giovanna Bimonte & Maria Graziano, 2009. "The measure of blocking coalitions in differential information economies," Economic Theory, Springer, vol. 38(2), pages 331-350, February.
    3. João Correia da Silva, 2014. "Two-period economies with price-contingent deliveries," FEP Working Papers 529, Universidade do Porto, Faculdade de Economia do Porto.
    4. Sun, Yeneng & Yannelis, Nicholas C., 2007. "Core, equilibria and incentives in large asymmetric information economies," Games and Economic Behavior, Elsevier, vol. 61(1), pages 131-155, October.
    5. Martins-da-Rocha, Victor Filipe & Angeloni, Laura, 2008. "Large economies with differential information but without free disposal," Economics Working Papers (Ensaios Economicos da EPGE) 671, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
    6. Glycopantis, Dionysius & Muir, Allan & Yannelis, Nicholas C., 2004. "Non-implementation of Rational Expectations as a Perfect Bayesian Equilibrium," Economics Series 148, Institute for Advanced Studies.
    7. Koczy, Laszlo A., 2006. "The core can be accessed with a bounded number of blocks," Journal of Mathematical Economics, Elsevier, vol. 43(1), pages 56-64, December.
    8. Podczeck, Konrad & Yannelis, Nicholas C., 2008. "Equilibrium theory with asymmetric information and with infinitely many commodities," Journal of Economic Theory, Elsevier, vol. 141(1), pages 152-183, July.
    9. Yoo, Seung Han, 2013. "An alternative proof for the existence of Radner equilibria," Mathematical Social Sciences, Elsevier, vol. 66(1), pages 87-90.
    10. João Correia-da-Silva & Carlos Hervés-Beloso, 2009. "Prudent expectations equilibrium in economies with uncertain delivery," Economic Theory, Springer, vol. 39(1), pages 67-92, April.
    11. Guadalupe Fugarolas & Carlos Herves Beloso & Emma Moreno Garcia & Juan Pablo Torres-Martinez, 2005. "A market game approach to differential information economies," Textos para discussão 512, Department of Economics PUC-Rio (Brazil).
    12. Erik Balder & Nicholas Yannelis, 2006. "Continuity properties of the private core," Economic Theory, Springer, vol. 29(2), pages 453-464, October.
    13. Dionysius Glycopantis & Allan Muir & Nicholas Yannelis, 2009. "On non-revealing rational expectations equilibrium," Economic Theory, Springer, vol. 38(2), pages 351-369, February.
    14. Fugarolas Álvarez-Ude, Guadalupe & Hervés-Beloso, Carlos, 2005. "A unified differential information framework assessing that more information is preferred to less," MPRA Paper 612, University Library of Munich, Germany.
    15. Laura Angeloni & V. Martins-da-Rocha, 2009. "Large economies with differential information and without free disposal," Economic Theory, Springer, vol. 38(2), pages 263-286, February.
    16. Marialaura Pesce, 2010. "On mixed markets with asymmetric information," Economic Theory, Springer, vol. 45(1), pages 23-53, October.
    17. Faias, Marta & Hervés-Beloso, Carlos & Moreno García, Emma, 2009. "A price mechanism in economies with asymmetric information," MPRA Paper 15176, University Library of Munich, Germany.
    18. Herves-Beloso, Carlos & Moreno-Garcia, Emma & Yannelis, Nicholas C., 2005. "An equivalence theorem for a differential information economy," Journal of Mathematical Economics, Elsevier, vol. 41(7), pages 844-856, November.
    19. Angeloni, Laura & Martins-da-Rocha, Victor Filipe, 2007. "Contract enforcement and incentive compatibility in large economies with differential information: the role of exact feasibility," Economics Working Papers (Ensaios Economicos da EPGE) 647, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).

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