Abstract:

In the situation where agents have private information we introduce several notions of Core depending on the information a coalition may have when it forms and on conjectures of outsiders. The stability of Core mechanisms to secession proposals is investigated. The two different kinds of stability analysis under consideration, normative and strategic, tend to give support to the more natural extension of the Core, called Statistical Core, only in situations where some strong form of increasing returns to distribution is met. Without this property, arguments for a concept of Core that is non empty in a reasonably large class of problems are less compelling. Applications to taxation and insurance are given.