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Private Information: Similarity as Compatibility


  • João Correia-da-Silva

    () (Faculdade de Economia. Universidade do Porto.)

  • Carlos Hervés-Beloso

    () (Facultad de Económicas. Universidad de Vigo.)


We investigate the continuity of equilibrium in differential information economies with a finite number of agents. In this setting, agents can make contingent contracts based on events that are commonly observed. With private information modelled as finite partitions of a compact and metrizable space of states of nature, we introduce a topology on information that takes into account the compatibility of information fields in assessing similarity between private information fields. This topology allows us to establish upper semicontinuity of the private core correspondence.

Suggested Citation

  • João Correia-da-Silva & Carlos Hervés-Beloso, 2004. "Private Information: Similarity as Compatibility," FEP Working Papers 155, Universidade do Porto, Faculdade de Economia do Porto.
  • Handle: RePEc:por:fepwps:155

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    References listed on IDEAS

    1. Ezra Einy & Ori Haimanko & Diego Moreno & Benyamin Shitovitz, 2005. "On the continuity of equilibrium and core correspondences in economies with differential information," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 26(4), pages 793-812, November.
    2. Cotter, Kevin D., 1986. "Similarity of information and behavior with a pointwise convergence topology," Journal of Mathematical Economics, Elsevier, vol. 15(1), pages 25-38, February.
    3. Kannai, Yakar, 1970. "Continuity Properties of the Core of a Market," Econometrica, Econometric Society, vol. 38(6), pages 791-815, November.
    4. Hildenbrand, W & Mertens, J F, 1972. "Upper Hemi-Continuity of the Equilibrium-Set Correspondence for Pure Exchange Economies," Econometrica, Econometric Society, vol. 40(1), pages 99-108, January.
    5. Ezra Einy & Diego Moreno & Benyamin Shitovitz, 2001. "Competitive and core allocations in large economies with differential information," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 18(2), pages 321-332.
    6. Erik Balder & Nicholas Yannelis, 2006. "Continuity properties of the private core," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 29(2), pages 453-464, October.
    7. Cotter, Kevin D., 1987. "Convergence of information, random variables and noise," Journal of Mathematical Economics, Elsevier, vol. 16(1), pages 39-51, February.
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    Cited by:

    1. Carlos Hervés-Beloso & V. Martins-da-Rocha & Paulo Monteiro, 2009. "Equilibrium theory with asymmetric information and infinitely many states," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 38(2), pages 295-320, February.
    2. Khan, M. Ali & Sun, Yeneng & Tourky, Rabee & Zhang, Zhixiang, 2008. "Similarity of differential information with subjective prior beliefs," Journal of Mathematical Economics, Elsevier, vol. 44(9-10), pages 1024-1039, September.

    More about this item


    Differential Information Economy; Asymmetric Information; Radner Equilibrium; Private Core; Topologies on Information.;

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing

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