Private information, transferable utility, and the core

• Published in: Economic theory Vol. 42; no. 3; pp. 591 - 609
• Main Authors: Flåm, S. D, Koutsougeras, L
• Format: Journal Article
• Language: English
• Published: Berlin/Heidelberg Berlin/Heidelberg : Springer-Verlag 01-03-2010; Springer; Springer-Verlag; Springer Nature B.V
• Subjects: Atoms; Commercial production; Commodities; Cooperative game; Core; Differential information; Economic theory; Economic Theory/Quantitative Economics/Mathematical Methods; Economics; Economics and Finance; Endowment; Endowments; Euclidean space; Exchange economy; Game Theory; Information theory; International economics; Lagrangian duality; Lagrangian function; Microeconomics; Public Finance; Research Article; Resource ownership; Shadow prices; Social and Behav. Sciences; Studies; Transferable utility; Value of information; Lagrangian duality; D51; Exchange economy; Differential information; Transferable utility; Value of information; C71; C62; Cooperative game; Core; D82
• ISSN: 0938-2259; 1432-0479
• DOI: 10.1007/s00199-008-0416-y

We consider transferable-utility, cooperative games, featuring differently informed players. Parties can exchange endowments or undertake joint production, but not pool information. Coalitional contracts must therefore comply with members' private information. Qualitatively different shadow prices then arise: some for material endowments, others for knowledge. We focus on computable core solutions, generated by shadow prices. Such solutions obtain under standard regularity assumptions.