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Core-stable Rings in Second Price Auctions with Common Values

  • Françoise Forges

    (Université Paris-Dauphine)

  • Ram Orzach

    (Oakland University)

In a common value auction in which the information partitions of the bidders are connected, all rings are core-stable. More precisely, the ex ante expected utilities of rings, at the (noncooperative) sophisticated equilibrium proposed by Einy, Haimanko, Orzach and Sela (Journal of Mathematical Economics, 2002), describe a cooperative game, in characteristic function form, in spite of the underlying strategic externalities. A ring is core-stable if the core of this characteristic function is not empty. Furthermore, every ring can implement its sophisticated equilibrium strategy by means of an incentive compatible mechanism.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2010.119.

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Date of creation: Sep 2010
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Handle: RePEc:fem:femwpa:2010.119
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