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The Weak Sequential Core for Two-Period Economies

METEOR Research Memorandum Working Paper No. RM/02/011

30 Pages Posted: 28 Mar 2002  

Arkadi Predtetchinski

Maastricht University - Department of Economics

P. Jean-Jacques Herings

Maastricht University

Andrés Perea y Monsuwé

Universidad Carlos III de Madrid - Department of Economics

Date Written: March 2002

Abstract

We adapt the core concept to deal with economies in which trade in assets takes place at period 1, uncertainty about asset payoffs is released at period 2, and agents trade in commodities afterwards. We define the weak sequential core as the set of allocations that are stable against coalitional deviations ex ante, and moreover cannot be improved upon by any coalition once the uncertainty is being released. We restrict ourselves to credible deviations, i.e. coalitional deviations at period 1 that cannot be counterblocked by some subcoalition at period 2. We study the relationship of the resulting core concept with other sequential core concepts, give sufficient conditions under which the weak sequential core is non-empty, but show that it is possible to give reasonable examples where it is empty.

Keywords: Core, Assets

JEL Classification: C71, C73, D52

Suggested Citation

Predtetchinski, Arkadi and Herings, P. Jean-Jacques and Perea y Monsuwé, Andrés, The Weak Sequential Core for Two-Period Economies (March 2002). METEOR Research Memorandum Working Paper No. RM/02/011. Available at SSRN: https://ssrn.com/abstract=304923 or http://dx.doi.org/10.2139/ssrn.304923

Arkadi Predtetchinski

Maastricht University - Department of Economics ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands
+31-43-3883636 (Phone)
+31-43-3884878 (Fax)

P. Jean-Jacques Herings (Contact Author)

Maastricht University ( email )

Department of Economics
P.O. Box 616
6200 MD Maastricht
Netherlands
+31 43 3883636 (Phone)
+31 43 3884878 (Fax)

HOME PAGE: http://www.personeel.unimaas.nl/p.herings/herings.htm

Andrés Perea y Monsuwé

Universidad Carlos III de Madrid - Department of Economics ( email )

Calle Madrid 126
Getafe, 28903
Spain

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