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Core-stable rings in second price auctions with common values

Listed author(s):
  • Francoise Forges

    ()

    (CEREMADE - CEntre de REcherches en MAthématiques de la DEcision - CNRS - Centre National de la Recherche Scientifique - Université Paris-Dauphine)

  • Ram Orzach

    (Dept of Economics, Oakland University - 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 et al. [Einy, E., Haimanko, O., Orzach, R., Sela, A., 2002. Dominance solvability of second-prices auctions with differential information. Journal of Mathematical Economics 37, 247–258], describe a cooperative games 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. An example shows that, if the bidders’ information partitions are not connected, rings may no longer be core-stable.

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Paper provided by HAL in its series Post-Print with number hal-00659016.

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Date of creation: 2011
Publication status: Published in Journal of Mathematical Economics, Elsevier, 2011, 47, pp.760-767
Handle: RePEc:hal:journl:hal-00659016
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00659016
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

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