Abstract
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.
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S. D. Flåm is grateful for financial support from E.ON Ruhrgas, Finansmarkedsfondet and NFR project RENERGI. Both authors thank a referee for comments that largely helped to improve the paper.
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Flåm, S.D., Koutsougeras, L. Private information, transferable utility, and the core. Econ Theory 42, 591–609 (2010). https://doi.org/10.1007/s00199-008-0416-y
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DOI: https://doi.org/10.1007/s00199-008-0416-y
Keywords
- Exchange economy
- Cooperative game
- Transferable utility
- Differential information
- Core
- Lagrangian duality
- Value of information