 Information, efficiency, and the core of an economyA chapter in Differential Information Economies, 2005, pp 55-64 from Springer Abstract: Summary The meaning of exchange efficiency is examined in the context of an economy in which agents differ in their endowments of information. Definitions of efficiency, and of the core, are proposed which emphasize the role of communication. Opportunities for insurance are preserved by restricting communication, or in a market system by restricting insider trading, prior to the pooling of information for the purposes of production. My subject is an economy in which different agents have different information. I propose a definition of exchange efficiency and I characterize the efficient allocations. I then examine an analogous definition of the core and I demonstrate that the core is not empty if the usual regularity conditions are satisfied. An example, however, illustrates that a market process may fail to yield an efficient allocation. In fact, in this example the market allocation is not even individually rational for the agents. Also, in this example the core is empty if there are opportunities for communication which disrupt arrangements for mutual insurance. Keywords: Cooperative Game; Market Process; Prevailing State; Feasible Allocation; Differential Information (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:spr:steccp:978-3-540-26979-3_2 Ordering information: This item can be ordered from Access Statistics for this chapter More chapters in Studies in Economic Theory from Springer |
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