Core-stable Rings in Second Price Auctions with Common Values
Françoise Forges, Ram Orzach
C71, C72, D44
Auctions, Bayesian game, Collusion, Core, Partition form game, Characteristic function
Climate Change and Sustainable Development
In a common value auction in which the information partitions of the bidders are connected, all rings are core-stable. More precisely, the ex ante expected utilities of rings, at the (noncooperative) sophisticated equilibrium proposed by Einy, Haimanko, Orzach and Sela (Journal of Mathematical Economics, 2002), describe a cooperative game, in characteristic function form, in spite of the underlying strategic externalities. A ring is core-stable if the core of this characteristic function is not empty. Furthermore, every ring can implement its sophisticated equilibrium strategy by means of an incentive compatible mechanism.