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ABSTRACT:

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.

SUGGESTED CITATION:
Françoise Forges and Ram Orzach, "Core-stable Rings in Second Price Auctions with Common Values" (November 19, 2010). Fondazione Eni Enrico Mattei Working Papers. Working Paper 507.
http://www.bepress.com/feem/paper507