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Equilibrium blocking in large quasilinear economies

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  • Yusuke Kamishiro

    ()
    (Brown University)

  • Roberto Serrano

    ()
    (Brown University and IMDEA Ciencias Sociales)

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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Bibliographic Info

Paper provided by Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales in its series Working Papers with number 2009-12.

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Date of creation: 09 Oct 2009
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Publication status: Published in Mathematics of Operations Research 36(3) August 2011: 552–567
Handle: RePEc:imd:wpaper:wp2009-12

Note: 43(6), June 2011: 1248-1267
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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;

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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, vol. 71(2), pages 513-520, March.

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