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Equilibrium Blocking in Large Quasilinear Economies

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Abstract

We study information transmission in large interim quasilinear economies using the theory of the core. We concentrate on the core with respect to equilibrium blocking, a core notion in which information is transmitted endogenously within coalitions, as blocking can be understood as an equilibrium of a communication mechanism used by players in coalitions. We consider independent, ex-post and signal-based replicas of the basic economy. For each, we offer an array of negative and positive convergence results as a function of the complexity of the mechanisms used by coalitions. We identify conditions under which asymmetric information remains as an externality and non-market outcomes stay in the core, as well as those for the core to converge to the set of incentive compatible ex-post Walrasian allocations. Further, all the results are robust to the relaxation of the incentive constraints, and hence suggest a process through which information may get incorporated into a fully revealing equilibrium price function.

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Paper provided by Brown University, Department of Economics in its series Working Papers with number 2009-12.

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Date of creation: 2009
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Handle: RePEc:bro:econwp:2009-12

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

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Keywords: Core w.r.t. Equilibrium Blocking; Core Convergence; Independent Replicas; Ex-Post Replicas; Signal-Based Replicas; Information Transmission; Communication Mechanisms; Mediation; Rational Expectations Equilibrium;

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Cited by:
  1. Kamishiro, Yusuke, 2011. "Informational size and the incentive compatible coarse core in quasilinear economies," Games and Economic Behavior, Elsevier, Elsevier, vol. 71(2), pages 513-520, March.

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