Non-Cooperative Implementation of the Core
Roberto Serrano and Rajiv Vohra
Social Choice and Welfare 14, 513-525 (1997)
Abstract
Non-Cooperative Implementation of the Core
Roberto Serrano and Rajiv Vohra
Social Choice and Welfare 14, 513-525 (1997)
Abstract
The aim of this paper is to examine the
non-cooperative basis of the core. We provide mechanisms that are motivated
closely by the
very description of the core, and have
the property that their non-cooperative equilibrium outcomes coincide with
the core. For general economic environments we construct an extensive form
mechanism in which each player proposes a status-quo and then also has
an opportunity to recontract with any other coalition. A proposal to recontract
is enforced if and only if it meets with the unanimous approval of such
a coalition. We show that subgame perfect outcomes of this mechanism coincide
with the core allocations of the underlying economy. We also consider situations,
such as labor managed firms, in which the mechanism designer does not know
the set of feasible allocations but can observe the output (utility).