Exchange economies with asymmetric information: competitive equilibrium and core

Summary. A replica theorem is shown to hold for exchange economies with asymmetric information. In a replicated exchange economy with asymmetric information the set of all core elements with equal treatment is nonempty, but it is in general only a subset of the core. Nevertheless, the replica theorem and the presence of at least one core element with equal treatment suffice to show existence of a competitive quasi-equilibrium. Conditions on the initial endowments and the communication system are given to ensure that every competitive quasi-equilibrium is a competitive equilibrium.Received: 24 February 2003, Revised: 3 July 2003JEL Classification Numbers: C70, D50, D82.I thank an anonymous referee whose comments led to an improvement of the paper.     

Market games with asymmetric information: the core

This paper concerns cores of economies with asymmetric information. Alternative definitions of the information available to traders in coalitions and the cooperative games they generate are analyzed. An important technical result states that such NTU games in characteristic function form are well defined. Properties of various cores with asymmetric information are examined. Sufficient conditions on information sharing rules are provided for the induced games to be totally balanced or balanced, so that their cores are nonempty. Incentive compatibility issues are considered. Finally, a perspective on this research area is provided.     

Balancedness and the core in economies with asymmetric information

Summary. A condition is given that is equivalent to balancedness of all NTU-games derived from an exchange economy with asymmetric information when endowments are variable. The condition is applicable to the ex-ante model with expected utilities, but also to the more general model of Arrow-Radner type economies without subjective probabilities. Differences in the interpretation of measurability assumptions between these two models are discussed, and another model with information consistent utility functions is developed in which the result would also hold. Received: December 12, 2001; revised version: November 1, 2002 RID="*" ID="*"I thank two anonymous referees whose comments led to an improvement of the paper.     

Core and Walrasian equilibria when agents' characteristics are extremely dispersed

Summary. It is shown that core-Walras equivalence fails whenever the commodity space is a non-separable Banach space. The interpretation is that a large number of agents guarantees core-Walras equivalence only if there is actually a large number of agents relative to the size of the commodity space. Otherwise a large number of agents means that agents' characteristics may be extremely dispersed, so that the standard theory of perfect competition fails. Supplementing the core-Walras non-equivalence result, it is shown that in the framework of economies with weakly compact consumption sets – as developed by Khan and Yannelis (1991) – the core is always non-empty, even if consumption sets are non-separable. December 12, 2001; revised version: December 6, 2002 RID="*" ID="*" Thanks to E. Dierker, M. Nermuth, R. Tourky, and N. C. Yannelis for helpful discussions and suggestions, and thanks to a referee for comments which helped to improve the final version.     

Incentive compatible core and competitive equilibria in differential information economies

Summary. If the allocations of a differential information economy are defined as incentive compatible state-contingent lotteries over consumption goods, competitive equilibrium allocations exist and belong to the (ex ante incentive) core. Furthermore, any competitive equilibrium allocation can be viewed as an element of the core of the n-fold replicated economy, for every n. The converse holds under the further assumption of independent private values but not in general, as shown by a counter-example. Received: August 9, 1999; revised version: September 12, 1999     

On games with identical equilibrium payoffs

Summary. This paper compares the sets of Nash, coalition- proof Nash and strong Nash equilibrium payoffs of normal form games which are closely related. We propose sufficient conditions for equivalent or closely related games to have identical sets of equilibrium payoffs. Received: April 23, 1999; revised version: November 23, 1999     

Walrasian versus quasi-competitive equilibrium and the core of a production economy

Summary. This paper presents very general conditions guaranteeing that a quasi-competitive equilibrium is a Walrasian equilibrium. We also develop a generalization (and a simplified proof) of Nikaidos and McKenzies extensions of the classic Debreu-Scarf theorem on core convergence, and apply the first result to obtain an equivalence between the set of Edgeworth equilibria and the set of Walrasian equilibria in a production economy.Received: 6 September 2002, Revised: 14 November 2003, JEL Classification Numbers: C71, D50, D51.     

Cooperative vs non-cooperative truels: little agreement, but does that matter?

It is well-known that non-cooperative and cooperative game theory may yield different solutions to games. These differences are particularly dramatic in the case of truels, or three-person duels, in which the players may fire sequentially or simultaneously, over one round or n rounds. Representative solution concepts (Nash and subgame-perfect equilibrium; two notions of core) are compared, and little agreement is found among them. Although it might be desirable to subsume these different solutions within a common framework, such unification seems unlikely since they are grounded in fundamentally different notions of stability.     

Arbitrary small indivisibilities

Summary. Arbitrary small indivisibilities may play an important role when the strong survival assumption does not hold. A hierarchic price is a finite ordered family of price vectors . It extends the notion of exchange values proposed by Gay [15]. These price notions were introduced in order to establish the existence of a generalized competitive equilibrium without the strong survival assumption. We show that a hierarchic price models phenomena related to small indivisibilities which the standard approach may not capture. More precisely, we prove in the framework of linear exchange economies that a hierarchic price may be seen as a standard price of an economy with arbitrary small indivisibilities. Received: September 25, 2001; revised version: November 25, 2002 RID="*" ID="*" This paper was partly written at Departamento de Matemáticas of Universidad de Vigo.     

Theorems on correspondences and stability of the core

In this note two theorems strengthening Grodal's (1971) Theorem on correspondences are proved. The first drops the convexity assumption. The second strengthens that theorem further for the case when the range is the positive orthant. In this case, the conclusion of Grodal's Theorem - the intersection of the integral with the interior of the range being open- is modified to read as the integral being a relative open subset of the positive orthant. An example is provided to show that, such a strengthening is not valid in general. This allows us to dispense with the requirment of convexity of preferences in Grodal's (1971) theorems on the closedness of the set of Pareto optimal allocations, the core, and the continuity of the core correspondence for pure exchange economies. We apply this result to show that blocking coalitions in a large economy are stable. Received: September 30, 1998; revised version: September 18, 2001 RID="*" ID="*" The author is grateful to an anonymous referee for helpful comments. The usual disclaimer applies.     

The core in an oligopoly market with indivisibility

Summary. This paper studies the core in an oligopoly market with indivisibility. It provides necessary and sufficient conditions for core existence in a general m-buyer n-seller market with indivisibility. When costs are dominated by opportunity costs (i.e., a firm's variable costs are sufficiently small), the core condition can be characterized by the primitive market parameters. In a 3-2 market with opportunity cost, the core is non-empty if and only if the larger seller's opportunity cost is either sufficiently large or sufficiently small. Received: June 9, 1999; revised version: October 22, 1999     

The political economy of the impossible trinity

This paper reconsiders the policy trilemma in an open economy by incorporating political economy concerns. We argue that the impact of government ideology on monetary independence, exchange rate stability, and capital flow restrictions should be analyzed in the broader context of restrictions imposed by the impossible trinity instead of the usual single-dimensional constraints. Employing a de facto measurement of these restrictions for a sample of 111 countries from 1980 to 2010, we show that the impact of government ideology on a country's position in this trilemma is highly context dependent: we find that its impact on exchange rate stability and monetary independence varies between developed and developing countries. We also show that the impact of government ideology on these two trilemma components is contingent on the stance of the respective economy's business cycle. Left-leaning governments seem to favor exchange rate stability over monetary independence in case of a negative output gap; suggesting a reversal of their commonly assumed partisan preferences in economically tight times.     

On the completeness of complete markets

We reconsider the allocational invariance of equilibria to different formulations of market completeness. We identify the so-far neglected assumption of sophisticated behavior as being crucial. First, the Arrow–Debreu setting is considered, where markets do not reopen in the future. Second, sequentially complete markets are analyzed, where goods on the spot markets and all contingent one-period ahead commodities can be traded in every state. Finally, complete markets are analyzed, where all possible contingent commodities can be traded at every state. Preferences may be time-consistent or time-inconsistent. A distinction is made between naïve and sophisticated behavior.     

Verifying gross substitutability

Summary. In labor market models as well as in exchange economies with indivisible goods gross substitutability is used as a property to guarantee the existence of competitive equilibria. This paper develops an easy way to check gross substitutability for utility functions concerning a finite set of indivisible goods (or employees) and money. Concavity is one of the conditions that has to be satisfied. Only one other, but similar, type of relation must be checked to guarantee gross substitutability. Received: 21 August 2000; revised version: 28 November 2001     

自信的员工更有创造力吗

基于创造力交互作用观,从内在动机角度分析核心自我评价通过和谐型激情对创造力的作用机制及相应的情境机制。对某制造企业11个事业部员工样本数据分析发现：核心自我评价显著正向影响员工创造力;核心自我评价与和谐型激情、和谐型激情与创造力均存在显著正相关关系;和谐型激情在核心自我评价影响创造力的过程中起中介作用,并受到团队成员交换关系的调节。     

Market and underground activities in a two-sector dynamic equilibrium model

Summary. In this paper a two sector dynamic general equilibrium model is developed in order to evaluate the implications of the underground economy from a business cycle perspective. There are three main results. First, introducing an underground sector improves the fit of the model to the data, especially along several important labor market dimensions. Second, the model produces substantial internal propagation of temporary shocks. Third, it is shown that underground activities offer risk sharing opportunities by allowing households to smooth income through a proper labor allocation between the two sectors.Received: 17 June 2002, Revised: 25 April 2003, JEL Classification Numbers: E320, E260, J22, H200.We have benefited from the comments and suggestions of John Donaldson. We would also like to thank Paolo Siconolfi, Jean Pierre Danthine, Fausto Gozzi, Edmund Phelps, Gustavo Piga, Domenico Tosato, and the participants in the seminars at various universities, David Giles and Stefano Pisani for providing useful information on the underground data, Francesca Caponi for the comments and the information concerning the legal and fiscal aspects involved in the calibration, and Glenn Williams for the research assistance. Finally, we thank two anonymous referees for helpful comments on this and on earlier versions of the paper. Chiarini acknowledges financial support from the Ateneo Research fund of the University of Rome, La Sapienza, Dinamiche dell'integrazione europea e scelta di politica economica. All errors are ours. Correspondence to: F. Busato     

我国上市公司高送转对盈利的信号效应研究

我国上市公司在进行股利分配时,大量采取高送转的方式。本研究通过对578家上交所A股上市公司高送转对盈利的信号效应的分析,揭示了高送转与公司盈利之间的关系。研究结果显示,上市公司进行高送转对公司未来的盈利信号较弱,高送转并不意味着未来盈利的高增长。只有现金红利增加的高送转传递了上市公司未来业绩良好的信号,而现金红利不变和现金红利减少的高送转不是未来盈利良好的信号。     

Incentives in market games with asymmetric information: the core

Summary. This paper examines the ex ante core of a pure exchange economy with asymmetric information in which state-dependent allocations are required to satisfy incentive compatibility. This restriction on players' strategies in the cooperative game can be interpreted as incomplete contracts or partial commitment. An example is provided in which the incentive compatible core with nontransferable utility is empty; the game fails to be balanced because convex combinations of incentive compatible net trades can violate incentive compatibility. However, randomization of such strategies leads to ex post allocations which satisfy incentive compatibility and are feasible on average. Hence, convexity is preserved in such a model and the resulting cooperative games are balanced. In this framework, an incentive compatible core concept is defined for NTU games derived from economies with asymmetric information. The main result is nonemptiness of the incentive compatible core. Received: December 26, 2001; revised version: June 11, 2002 RID="*" ID"*" This work was financed, in part, by contract No 26 of the programme “P?le d'attraction interuniversitaire” of the Belgian government, and, in part, by research grant SBR93-09854 from the U.S. National Science Foundation. Much of my thinking about this topic was developed during a wonderful visit to CORE for the 1991–1992 academic year (on sabbatical from the University of Pennsylvania). This paper was originally circulated in December 1991 as CARESS Working Paper #91-38, Center for Analytic Research in Economics and the Social Sciences, Department of Economics, University of Pennsylvania and in February 1992 as CORE Discussion Paper 9221, Center for Operations Research and Econometrics, Université Catholique de Louvain, Louvain-la-Neuve, Belgium. RID="*" ID="*" At the very start of my research, Jean-Fran?ois Mertens was almost a co-author. Fran?ois Forges provided detailed comments at a later stage, during my visit to THEMA, Université Cergy-Pontoise, in Spring 1997. They are entitled to the customary disclaimer.