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Information, Uncertainty and the Core

R. R. Routledge

University of Liverpool

March 3, 2012

How are contracts formed when agents face uncertainty, have asymmetric information and cannot write binding agreements? In this paper we propose a solution to this problem. Agents can discuss state-contingent allocations but cannot write binding contracts. At any stage in the contract formation phase a coalition of agents can deviate and choose to form agreements amongst themselves. However, we restrict these deviations to be credible: meaning that no sub-coalition has a further credible deviation. In this context, we propose the coarse and fine weak sequential cores as solution concepts and sufficient conditions for the non-emptiness of these solution concepts are provided.

Number of Pages in PDF File: 32

Keywords: credible deviations, contract formation, cooperative games, asymmetric information

JEL Classification: C71, C73

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Date posted: March 5, 2012  

Suggested Citation

Routledge, R. R., Information, Uncertainty and the Core (March 3, 2012). Available at SSRN: https://ssrn.com/abstract=2015414 or http://dx.doi.org/10.2139/ssrn.2015414

Contact Information

R. R. Routledge (Contact Author)
University of Liverpool ( email )
Liverpool, L69 7ZA
United Kingdom
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