Atlas: On the Core of an Economy with Differential Information by Ezra Einy

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First World Congress of the Game Theory Society (Games 2000)
July 24-28, 2000
Basque Country University and Fundacion B.B.V.
Bilbao, Spain

Organizers
Ehud Kalai, Federico Valenciano

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On the Core of an Economy with Differential Information
by
Ezra Einy
Ben-Gurion University
Coauthors: Diego Moreno, Benyamin Shitovitz

In a seminal paper, Wilson (1978) introduced the notion of the fine core of an economy with differential information. The definition of the fine core presumes that the traders have the opportunity to exchange information in order to refine the information they initially had. A coalition blocks an allocation if there is an event that the coalition can commonly discern after information sharing has taken place and a feasible allocation which is preferred by every member of the coalition based on his refined information In this paper we study the relationship between the fine core and the ex-post core. We consider an atomless exchange economy with differential information in which the set of states of nature is finite. We show that under standard conditions in such economies the fine core is a subset of the ex-post core. This together with Aumann’s Core Equivalence Theorem imply that every fine core allocation is a selection from the equilibrium correspondence of the associated family of full information economies. Finally, we show that when each trader knows his own endowment and his own utility function, then every fine core allocation is a rational expectations equilibrium allocation.

Date received: June 20, 2000