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Core-stable rings in auctions with independent private values


  • Biran, Omer
  • Forges, Françoise


We propose a semi-cooperative game theoretic approach to check whether a given coalition is stable in a Bayesian game with independent private values. The ex ante expected utilities of coalitions, at an incentive compatible (noncooperative) coalitional equilibrium, describe a (cooperative) partition form game. A coalition is core-stable if the core of a suitable characteristic function, derived from the partition form game, is not empty. As an application, we study collusion in auctions in which the bidders' final utility possibly depends on the winner's identity. We show that such direct externalities offer a possible explanation for cartels' structures (not) observed in practice.

Suggested Citation

  • Biran, Omer & Forges, Françoise, 2011. "Core-stable rings in auctions with independent private values," Games and Economic Behavior, Elsevier, vol. 73(1), pages 52-64, September.
  • Handle: RePEc:eee:gamebe:v:73:y:2011:i:1:p:52-64

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    References listed on IDEAS

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    Cited by:

    1. Françoise Forges & Roberto Serrano, 2013. "Cooperative Games With Incomplete Information: Some Open Problems," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 15(02), pages 1-17.
    2. Mikhail Safronov, 2016. "A Coasian Approach to Efficient Mechanism Design," Cambridge Working Papers in Economics 1619, Faculty of Economics, University of Cambridge.
    3. Forges, Françoise & Orzach, Ram, 2011. "Core-stable rings in second price auctions with common values," Journal of Mathematical Economics, Elsevier, vol. 47(6), pages 760-767.
    4. repec:dau:papers:123456789/8158 is not listed on IDEAS
    5. Omer Biran, 2011. "Core stable bidding rings in independent private value auctions with externalities," Working Papers halshs-00608008, HAL.
    6. repec:dau:papers:123456789/7891 is not listed on IDEAS
    7. Omer Biran, 2013. "Strategic collusion in auctions with externalities," Theory and Decision, Springer, vol. 75(1), pages 117-136, July.
    8. Olga Gorelkina, 2014. "Bidder Collusion and the Auction with Target Bids," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2014_10, Max Planck Institute for Research on Collective Goods.
    9. repec:eee:poleco:v:49:y:2017:i:c:p:1-23 is not listed on IDEAS
    10. Brangewitz, Sonja & Brockhoff, Sarah, 2014. "Stability of coalitional equilibria within repeated tax competition," Center for Mathematical Economics Working Papers 461, Center for Mathematical Economics, Bielefeld University.
    11. Sonja Brangewitz & Sarah Brockhoff, 2012. "Stability of Coalitional Equilibria within Repeated Tax Competition," Working Papers CIE 48, Paderborn University, CIE Center for International Economics.
    12. Forges, Françoise, 2013. "A folk theorem for Bayesian games with commitment," Games and Economic Behavior, Elsevier, vol. 78(C), pages 64-71.

    More about this item


    Auctions Bayesian game Collusion Core Partition function game;

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions


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