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An extensive form interpretation of the private core

In: Differential Information Economies

Author

Listed:
  • Dionysius Glycopantis

    (City University)

  • Allan Muir

    (City University)

  • Nicholas C. Yannelis

    (University of Illinois)

Abstract

Summary The private core of an economy with differential information, (Yannelis (1991)), is the set of all state-wise feasible and private information measurable allocations which cannot be dominated, in terms of ex ante expected utility functions, by state-wise feasible and private information measurable net trades of any coalition. It is coalitionally Bayesian incentive compatible and also takes into account the information superiority of an individual. We provide a noncooperative extensive form interpretation of the private core for three person games. We construct game trees which indicate the sequence of decisions and the information sets, and explain the rules for calculating ex ante expected payoffs. In the spirit of the Nash programme, the private core is thus shown to be supported by the perfect Bayesian equilibrium of a noncooperative game. The discussion contributes not only to the development of ideas but also to the understanding of the dynamics of how coalitionally incentive compatible contracts can be realized.

Suggested Citation

  • Dionysius Glycopantis & Allan Muir & Nicholas C. Yannelis, 2005. "An extensive form interpretation of the private core," Studies in Economic Theory, in: Dionysius Glycopantis & Nicholas C. Yannelis (ed.), Differential Information Economies, pages 593-618, Springer.
    • Handle: RePEc:spr:steccp:978-3-540-26979-3_31
    DOI: 10.1007/3-540-26979-7_31
    as

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