Corvinus
Corvinus

Cooperation under incomplete contracting

Habis, Helga and Herings, Jean-Jacques P. (2009) Cooperation under incomplete contracting. Working Paper. METEOR, Maastricht Research School of Economics of Technology and Organization., Maastricht.

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Abstract

We examine the notion of the core when cooperation takes place in a setting with time and uncertainty. We do so in a two-period general equilibrium setting with incomplete markets. Market incompleteness implies that players cannot make all possible binding commitments regarding their actions at different date-events. We unify various treatments of dynamic core concepts existing in the literature. This results in definitions of the Classical Core, the Segregated Core, the Two-stage Core, the Strong Sequential Core, and the Weak Sequential Core. Except for the Classical Core, all these concepts can be defined by requiring absence of blocking in period 0 and at any date-event in period 1. The concepts only differ with respect to the notion of blocking in period 0. To evaluate these concepts, we study three market structures in detail: strongly complete markets, incomplete markets in finance economies, and incomplete markets in settings with multiple commodities.

Item Type:Monograph (Working Paper)
Series Name:Research Memoranda
Uncontrolled Keywords:cooperation, incomplete contracting, core, time and uncertainty, JEL codes: C71, C73, D52
Subjects:Mathematics, Econometrics
ID Code:651
Deposited By: Ádám Hoffmann
Deposited On:30 May 2012 08:31
Last Modified:03 Jul 2012 01:27

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