NONCOOPERATIVE IMPLEMENTATION OF THE CORE

The aim of this paper is to examine the non-cooperative basis of the c ore. We provide mechanisms that are motivated closely by the very desc ription of the core, and have the property that their non-cooperative equilibrium outcomes coincide with the core. For general economic envi ronments 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 s how that subgame perfect outcomes of this mechanism coincide with the core allocations of the underlying economy. We also consider situation s, such as labor managed firms, in which the mechanism designer does n ot know the set of feasible allocations but can observe the output (ut ility).