Incomplete Information, Credibility and the Core

Brown University Economics Working Paper No. 2003-21

24 Pages Posted: 18 May 2005

See all articles by Rajiv Vohra

Rajiv Vohra

Brown University - Department of Economics

Bhaskar Dutta

University of Warwick - Department of Economics

Date Written: March 2005

Abstract

An appropriate (interim) notion of the core for an economy with incomplete information depends on the amount of information that coalitions can share. The coarse and fine core, as originally defined by Wilson (1978), correspond to two polar cases, involving no information sharing and arbitrary information sharing, respectively. We propose a new core notion, the credible core, which incorporates incentive compatibility constraints, and is based on the idea that a coalition can coordinate its potential objection to a status-quo over an event that can be credibly inferred from the nature of the objection being contemplated. We provide sufficient conditions ensuring non-emptiness of the credible core.

Keywords: Core, Asymmetric Information, Incentive Compatibility, Credibility

JEL Classification: C71, D82, D51

Suggested Citation

Vohra, Rajiv and Dutta, Bhaskar, Incomplete Information, Credibility and the Core (March 2005). Brown University Economics Working Paper No. 2003-21, Available at SSRN: https://ssrn.com/abstract=724145 or http://dx.doi.org/10.2139/ssrn.724145

Rajiv Vohra (Contact Author)

Brown University - Department of Economics ( email )

Box B
Providence, RI 02912
United States
401-863-3030 (Phone)
401-863-1970 (Fax)

Bhaskar Dutta

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom
44 24 7652 3478 (Phone)
44 24 7652 3032 (Fax)

HOME PAGE: http://www2.warwick.ac.uk/fac/soc/economics/staff/faculty/dutta/

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