On the Core of an Economy with Differential Information

Abstract

bin ya (d econ.haifa.ae.il We show that the fine core of an ato mIes s exchange economy with differential information is a subset of the ex-post core of the eeonomy. (This inc1usion may be proper, and it does not hold for economies with a finite number of traders.) Consequently, every fine eore allocation is a selection from the equilibrium eorrespondence of the associated family of full information economies. Moreover, when each trader knows his or her own utility funetion and his of her own endowment, every fine eore allocation is a rational expeetations equilibrium alloeation. Journal ol Economic Literature Classifieation Numbers: cn, 050.

Incentives and the core of an exchange economy: a survey

“…And with a finite number of states it is then possible to construct such a coalition in which the state can be discerned by pooling the private information in the large coalition. The following result is proved in Einy et al (2000).…”

“…This argument, showing that the fine core is a subset of the ex post core, can be applied to any economy in which the state can be identified by pooling the information of agents in some coalition with an ex post objection. Einy et al (2000) show that this is generally the case in an atomless economy with a finite number of states. The proof is based on the argument that in an atomless economy, if there is an objection in a certain state, there exists an objection by an arbitrarily large coalition; see Vind (1972).…”

“…20 Since the 18 Despite the terminology, these concepts should not be confused with the fine core introduced in Wilson, 1978 which is an interim concept. A recent paper which deals with Wilson's fine core is Einy et al, 2000;see Section 5.3. 19 Allen (1993) and Koutsougeras and Yannelis (1993)'s "coarse core" is based on the latter assumption.…”

Pooling, pricing and trading of risks

“…Is such a scheme of side payments available? 8 More precisely: can a core solution be exhibited, computed, interpreted and implemented? Yes, as seen next, if agents are risk averse, indeed it can!…”

“…Applying the discrete convex analysis -and notably the Fenchel-type duality theorem 5.2 in [28] -and presuming all payoff functions π i : Y = Z G×S → R∪ {−∞} M-concave, it holds an analog of Theorem 1 below. 8 It is known from [33] that concave payoffs π i and finite values π C (ȳ C ) suffice for the core to be nonempty. A fortiori, the game having characteristic function S ⊇ C 7 → π C (ȳ C ) ∈ R then becomes totally balanced.…”