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Information Transmission and Core Convergence in Quasilinear Economies

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We study core convergence in interim quasilinear economies with asymmetric information, concentrating on core notions in which information is transmitted endogenously within coalitions and the incentive constraints are relevant. Specifically, we shall focus on the credible core and randomized mediated core concepts. We consider independent replicas of the basic economy: independent copies of the economy in which each individual’s utility only depends on the information of the individuals who belong to the same copy. We provide an example in which core convergence does not obtain for the Dutta-Vohra credible core and for Myerson’s randomized mediated core. On the other hand, we establish a positive convergence result for a refinement of Myerson’s core for which information disseminates across coalitions within a given random blocking mechanism. Under some conditions, this core converges to the set of incentive compatible ex-post Walrasian allocations.

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Paper provided by Brown University, Department of Economics in its series Working Papers with number 2008-5.

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Date of creation: 2008
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Handle: RePEc:bro:econwp:2008-5

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Postal: Department of Economics, Brown University, Providence, RI 02912

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Keywords: Core Convergence; Information Transmission; Coalitional Voting; Mechanisms; Mediation; Rational Expectations Equilibrium;

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  1. Forges, Françoise & Heifetz, Aviad & Minelli, Enrico, 2001. "Incentive compatible core and competitive equilibria in differential information economies," Economics Papers from University Paris Dauphine 123456789/5451, Paris Dauphine University.
  2. Francoise Forges & Jean-Francois Mertens & Rajiv Vohra, 2001. "The Ex Ante Incentive Compatible Core in the absence of wealth effects," Working Papers 2001-01, Brown University, Department of Economics.
  3. Wilson, Robert B, 1978. "Information, Efficiency, and the Core of an Economy," Econometrica, Econometric Society, vol. 46(4), pages 807-16, July.
  4. Roberto Serrano & Rajiv Vohra & Oscar Volij, 2000. "On the Failure of Core Convergence in Economies with Asymmetric Information," Econometric Society World Congress 2000 Contributed Papers 0141, Econometric Society.
  5. de Clippel, Geoffroy & Minelli, Enrico, 2005. "Two remarks on the inner core," Games and Economic Behavior, Elsevier, vol. 50(2), pages 143-154, February.
  6. Rajiv Vohra, 1997. "Incomplete Information, Incentive Compatibility and the Core," Working Papers 97-11, Brown University, Department of Economics.
  7. Roger Myerson, 2004. "Virtual utility and the core for games with incomplete information," Econometric Society 2004 North American Summer Meetings 659, Econometric Society.
  8. Qin Cheng-Zhong, 1993. "The Inner Core and the Strictly Inhibitive Set," Journal of Economic Theory, Elsevier, vol. 59(1), pages 96-106, February.
  9. Geoffroy de Clippel, 2004. "The Type-Agent Core for Exchange Economies with Asymmetric Information," Working Papers 2004-18, Brown University, Department of Economics.
  10. Bhaskar Dutta & Rajiv Vohra, 2001. "Incomplete Information, Credibility and the Core," Working Papers 2001-02, Brown University, Department of Economics.
  11. Kreps, David M., 1977. "A note on "fulfilled expectations" equilibria," Journal of Economic Theory, Elsevier, vol. 14(1), pages 32-43, February.
  12. FORGES, Françoise & MINELLI, Enrico & VOHRA, Rajiv, 2001. "Incentives and the core of an exchange economy: a survey," CORE Discussion Papers 2001043, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  13. Rajiv Vohra & Roberto Serrano, 2004. "Information Transmission in Coalitional Voting Games," Econometric Society 2004 North American Summer Meetings 519, Econometric Society.
  14. Gul, Faruk & Postlewaite, Andrew, 1992. "Asymptotic Efficiency in Large Exchange Economies with Asymmetric Information," Econometrica, Econometric Society, vol. 60(6), pages 1273-92, November.
  15. Postlewaite, Andrew & Schmeidler, David, 1986. "Implementation in differential information economies," Journal of Economic Theory, Elsevier, vol. 39(1), pages 14-33, June.
  16. Einy, Ezra & Moreno, Diego & Shitovitz, Benyamin, 2000. "Rational expectations equilibria and the ex-post core of an economy with asymmetric information," Journal of Mathematical Economics, Elsevier, vol. 34(4), pages 527-535, December.
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