IDEAS home Printed from https://ideas.repec.org/a/eee/jetheo/v213y2023ics0022053123001114.html
   My bibliography  Save this article

Signaling, screening, and core stability

Author

Listed:
  • Kamishiro, Yusuke
  • Vohra, Rajiv
  • Serrano, Roberto

Abstract

This paper provides a noncooperative approach to core stability in an economy with incomplete information. We study the perfect Bayesian equilibria of an extensive form mechanism that extends the one used by Serrano and Vohra (1997) to implement the core of a complete-information economy. This leads to a version of the core that we refer to as the sequential core, which allows for information to be transmitted among the agents during the process of coalition formation. Such information flows include proposals that can be viewed as signaling devices and/or screening contracts. Equilibrium refinements are then used to provide justifications for the coarse core and the fine core. As a robustness check, we show that the sequential core corresponds to stationary PBE outcomes of an infinite horizon bargaining game.

Suggested Citation

  • Kamishiro, Yusuke & Vohra, Rajiv & Serrano, Roberto, 2023. "Signaling, screening, and core stability," Journal of Economic Theory, Elsevier, vol. 213(C).
    • Handle: RePEc:eee:jetheo:v:213:y:2023:i:c:s0022053123001114
    DOI: 10.1016/j.jet.2023.105715
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0022053123001114
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jet.2023.105715?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Lee, Darin & Volij, Oscar, 2002. "The core of economies with asymmetric information: an axiomatic approach," Journal of Mathematical Economics, Elsevier, vol. 38(1-2), pages 43-63, September.
    2. Cho, In-Koo, 1987. "A Refinement of Sequential Equilibrium," Econometrica, Econometric Society, vol. 55(6), pages 1367-1389, November.
    3. Okada, Akira, 2012. "Non-cooperative bargaining and the incomplete informational core," Journal of Economic Theory, Elsevier, vol. 147(3), pages 1165-1190.
    4. Serrano, Roberto & Vohra, Rajiv, 2007. "Information transmission in coalitional voting games," Journal of Economic Theory, Elsevier, vol. 134(1), pages 117-137, May.
    5. Kalyan Chatterjee & Bhaskar Dutia & Debraj Ray & Kunal Sengupta, 2013. "A Noncooperative Theory of Coalitional Bargaining," World Scientific Book Chapters, in: Bargaining in the Shadow of the Market Selected Papers on Bilateral and Multilateral Bargaining, chapter 5, pages 97-111, World Scientific Publishing Co. Pte. Ltd..
    6. Marcelo Ariel Fernandez & Kirill Rudov & Leeat Yariv, 2022. "Centralized Matching with Incomplete Information," American Economic Review: Insights, American Economic Association, vol. 4(1), pages 18-33, March.
    7. Holmstrom, Bengt & Myerson, Roger B, 1983. "Efficient and Durable Decision Rules with Incomplete Information," Econometrica, Econometric Society, vol. 51(6), pages 1799-1819, November.
    8. Lee, Darin, 1998. "A note on the individualistic foundations of the core in economies with asymmetric information," Economics Letters, Elsevier, vol. 61(2), pages 203-208, November.
    9. In-Koo Cho & David M. Kreps, 1987. "Signaling Games and Stable Equilibria," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(2), pages 179-221.
    10. Vohra, Rajiv, 1999. "Incomplete Information, Incentive Compatibility, and the Core," Journal of Economic Theory, Elsevier, vol. 86(1), pages 123-147, May.
    11. 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.
    12. Forges Francoise, 1994. "Posterior Efficiency," Games and Economic Behavior, Elsevier, vol. 6(2), pages 238-261, March.
    13. Grossman, Sanford J. & Perry, Motty, 1986. "Perfect sequential equilibrium," Journal of Economic Theory, Elsevier, vol. 39(1), pages 97-119, June.
    14. 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.
    15. de Clippel, Geoffroy & Minelli, Enrico, 2004. "Two-person bargaining with verifiable information," Journal of Mathematical Economics, Elsevier, vol. 40(7), pages 799-813, November.
    16. Serrano, Roberto, 1997. "Reinterpreting the Kernel," Journal of Economic Theory, Elsevier, vol. 77(1), pages 58-80, November.
    17. Hart, Sergiu & Mas-Colell, Andreu, 1996. "Bargaining and Value," Econometrica, Econometric Society, vol. 64(2), pages 357-380, March.
    18. Perry, Motty & Reny, Philip J, 1994. "A Noncooperative View of Coalition Formation and the Core," Econometrica, Econometric Society, vol. 62(4), pages 795-817, July.
    19. Dutta, Bhaskar & Vohra, Rajiv, 2005. "Incomplete information, credibility and the core," Mathematical Social Sciences, Elsevier, vol. 50(2), pages 148-165, September.
    20. Robert Wilson, 2005. "Information, efficiency, and the core of an economy," Studies in Economic Theory, in: Dionysius Glycopantis & Nicholas C. Yannelis (ed.), Differential Information Economies, pages 55-64, Springer.
    21. Moldovanu Benny & Winter Eyal, 1995. "Order Independent Equilibria," Games and Economic Behavior, Elsevier, vol. 9(1), pages 21-34, April.
    22. 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.
    23. Okada, Akira, 2021. "Stable matching and protocol-free equilibrium," Games and Economic Behavior, Elsevier, vol. 128(C), pages 193-201.
    24. Akira Okada & Eyal Winter, 2002. "A Non-cooperative Axiomatization of the Core," Theory and Decision, Springer, vol. 53(1), pages 1-28, August.
    25. Roberto Serrano & Rajiv Vohra, 1997. "Non-cooperative implementation of the core," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 14(4), pages 513-525.
    26. Pomatto, Luciano, 2022. "Stable matching under forward-induction reasoning," Theoretical Economics, Econometric Society, vol. 17(4), November.
    27. Yusuke Kamishiro & Roberto Serrano, 2011. "Equilibrium Blocking in Large Quasilinear Economies," Mathematics of Operations Research, INFORMS, vol. 36(3), pages 552-567, August.
    28. Gale, Douglas, 1978. "The core of a monetary economy without trust," Journal of Economic Theory, Elsevier, vol. 19(2), pages 456-491, December.
    29. repec:dau:papers:123456789/8158 is not listed on IDEAS
    30. repec:dau:papers:123456789/169 is not listed on IDEAS
    31. Qingmin Liu, 2020. "Stability and Bayesian Consistency in Two-Sided Markets," American Economic Review, American Economic Association, vol. 110(8), pages 2625-2666, August.
    32. Qingmin Liu & George J. Mailath & Andrew Postlewaite & Larry Samuelson, 2014. "Stable Matching With Incomplete Information," Econometrica, Econometric Society, vol. 82(2), pages 541-587, March.
    33. Roberto Serrano, 2021. "Sixty-seven years of the Nash program: time for retirement?," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 12(1), pages 35-48, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Akira Okada, 2015. "Cooperation and Institution in Games," The Japanese Economic Review, Japanese Economic Association, vol. 66(1), pages 1-32, March.
    2. Okada, Akira, 2012. "Non-cooperative bargaining and the incomplete informational core," Journal of Economic Theory, Elsevier, vol. 147(3), pages 1165-1190.
    3. 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.
    4. Serrano, Roberto & Vohra, Rajiv, 2007. "Information transmission in coalitional voting games," Journal of Economic Theory, Elsevier, vol. 134(1), pages 117-137, May.
    5. Pomatto, Luciano, 2022. "Stable matching under forward-induction reasoning," Theoretical Economics, Econometric Society, vol. 17(4), November.
    6. Toshiji Miyakawa, 2017. "The farsighted core in a political game with asymmetric information," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 49(1), pages 205-229, June.
    7. Yusuke Kamishiro & Roberto Serrano & Myrna Wooders, 2021. "Monopolists of scarce information and small group effectiveness in large quasilinear economies," International Journal of Game Theory, Springer;Game Theory Society, vol. 50(4), pages 801-827, December.
    8. de Clippel, Geoffroy, 2007. "The type-agent core for exchange economies with asymmetric information," Journal of Economic Theory, Elsevier, vol. 135(1), pages 144-158, July.
    9. Yusuke Kamishiro, 2015. "On the core of a cost allocation problem under asymmetric information," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 25(1), pages 17-32.
    10. repec:dau:papers:123456789/8158 is not listed on IDEAS
    11. Dutta, Bhaskar & Vohra, Rajiv, 2005. "Incomplete information, credibility and the core," Mathematical Social Sciences, Elsevier, vol. 50(2), pages 148-165, September.
    12. Ray, Debraj & Vohra, Rajiv, 2015. "Coalition Formation," Handbook of Game Theory with Economic Applications,, Elsevier.
    13. Yusuke Kamishiro & Roberto Serrano, 2020. "Small Informational Size and Interim Cores of Large Quasilinear Economies," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 22(01), pages 1-12, March.
    14. Francoise Forges, 2006. "The Ex Ante Incentive Compatible Core in Exchange Economies with and without Indivisibilities," CESifo Working Paper Series 1686, CESifo.
    15. 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.
    16. Lee, Darin, 1998. "A note on the individualistic foundations of the core in economies with asymmetric information," Economics Letters, Elsevier, vol. 61(2), pages 203-208, November.
    17. Yusuke Kamishiro & Roberto Serrano & Myrna Wooders, 2015. "Information and Small Group Effectiveness in Large Quasilinear Economies," Working Papers 2015-11, Brown University, Department of Economics.
    18. 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.
    19. Roberto Serrano, 2005. "Fifty years of the Nash program, 1953-2003," Investigaciones Economicas, Fundación SEPI, vol. 29(2), pages 219-258, May.
    20. Yusuke Kamishiro & Roberto Serrano, 2009. "Equilibrium blocking in large quasilinear economies," Working Papers 2009-12, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
    21. Bikhchandani, Sushil, 2017. "Stability with one-sided incomplete information," Journal of Economic Theory, Elsevier, vol. 168(C), pages 372-399.

    More about this item

    Keywords

    Core; Incomplete information; Perfect Bayesian equilibrium; Signaling; Screening; Nash program;
    All these keywords.

    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
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jetheo:v:213:y:2023:i:c:s0022053123001114. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622869 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.