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Incentive compatible core and competitive equilibria in differential information economies

Author

Listed:
  • Aviad Heifetz

    (School of Economics, University of Tel Aviv, Tel Aviv, ISRAEL)

  • Françoise Forges

    (THEMA, Université de Cergy-Pontoise, and Institut Universitaire de France, Paris, FRANCE)

  • Enrico Minelli

    (Dipartimento di Scienze Economiche, Università di Brescia, Via San Faustino 74/B,I-25122 Brescia, ITALY)

Abstract

If the allocations of a differential information economy are defined as incentive compatible state-contingent lotteries over consumption goods, competitive equilibrium allocations exist and belong to the (ex ante incentive) core. Furthermore, any competitive equilibrium allocation can be viewed as an element of the core of the n-fold replicated economy, for every n. The converse holds under the further assumption of independent private values but not in general, as shown by a counter-example.

Suggested Citation

  • Aviad Heifetz & Françoise Forges & Enrico Minelli, 2001. "Incentive compatible core and competitive equilibria in differential information economies," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 18(2), pages 349-365.
  • Handle: RePEc:spr:joecth:v:18:y:2001:i:2:p:349-365
    Note: Received: August 9, 1999; revised version: September 12, 1999
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    Cited by:

    1. Yusuke Kamishiro & Roberto Serrano, 2009. "Equilibrium Blocking in Large Quasilinear Economies," Working Papers wp2009_0911, CEMFI.
    2. João Correia-da-Silva, 2015. "Two-period economies with price-contingent deliveries," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 59(3), pages 509-525, August.
    3. Kovalenkov, Alexander & Wooders, Myrna, 2003. "Approximate cores of games and economies with clubs," Journal of Economic Theory, Elsevier, vol. 110(1), pages 87-120, May.
    4. 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.
    5. Kovalenkov, Alexander & Wooders, Myrna Holtz, 1999. "An Explicit Bound on E For Nonemptimess of E-Cores of Games," The Warwick Economics Research Paper Series (TWERPS) 537, University of Warwick, Department of Economics.
    6. Beth Allen, 2006. "Market games with asymmetric information: the core," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 29(2), pages 465-487, October.
    7. M. Ali Khan, 2007. "Perfect Competition," PIDE-Working Papers 2007:15, Pakistan Institute of Development Economics.
    8. Yusuke Kamishiro & Roberto Serrano, 2008. "Information transmission and core convergence in quasilinear economies," Working Papers 2008-01, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
    9. Myerson, Roger B., 2007. "Virtual utility and the core for games with incomplete information," Journal of Economic Theory, Elsevier, vol. 136(1), pages 260-285, September.
    10. Yusuke Kamishiro & Roberto Serrano, 2011. "Equilibrium Blocking in Large Quasilinear Economies," Mathematics of Operations Research, INFORMS, vol. 36(3), pages 552-567, August.
    11. Hara, Chiaki, 2002. "The anonymous core of an exchange economy," Journal of Mathematical Economics, Elsevier, vol. 38(1-2), pages 91-116, September.
    12. Sun, Yeneng & Yannelis, Nicholas C., 2007. "Core, equilibria and incentives in large asymmetric information economies," Games and Economic Behavior, Elsevier, vol. 61(1), pages 131-155, October.
    13. Forges, Francoise & Minelli, Enrico & Vohra, Rajiv, 2002. "Incentives and the core of an exchange economy: a survey," Journal of Mathematical Economics, Elsevier, vol. 38(1-2), pages 1-41, September.
    14. Alexander Kovalenkov & Myrna Wooders, 2003. "Advances in the theory of large cooperative games and applications to club theory; the side payments case," Chapters, in: Carlo Carraro (ed.), The Endogenous Formation of Economic Coalitions, chapter 1, Edward Elgar Publishing.
    15. Joao Correia-da-Silva & Carlos Herves-Beloso, 2008. "General equilibrium with private state verification," Levine's Working Paper Archive 814577000000000024, David K. Levine.
    16. Alexander Kovalenkov & Myrna Holtz Wooders, 2001. "An Exact Bound on Epsilon for Nonemptiness of Epsilon Cores of Games," Mathematics of Operations Research, INFORMS, vol. 26(4), pages 654-678, November.
    17. Bhowmik, Anuj & Cao, Jiling, 2018. "Ex-post core, fine core and rational expectations equilibrium allocations," Journal of Mathematical Economics, Elsevier, vol. 74(C), pages 128-138.
    18. Ulrich Schwalbe, 2003. "The Core of a Production Economy with Asymmetric Information," Metroeconomica, Wiley Blackwell, vol. 54(4), pages 385-403, November.
    19. McLean, Richard & Postlewaite, Andrew, 2005. "Core convergence with asymmetric information," Games and Economic Behavior, Elsevier, vol. 50(1), pages 58-78, January.
    20. Mitridati, Lesia & Kazempour, Jalal & Pinson, Pierre, 2021. "Design and game-Theoretic analysis of community-Based market mechanisms in heat and electricity systems," Omega, Elsevier, vol. 99(C).

    More about this item

    Keywords

    Incentive compatibility; General equilibrium; Core.;
    All these keywords.

    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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