An extensive form interpretation of the private core

The private core of an economy with differential information, (Yannelis (19 91)), is the set of all state-wise feasible and private information measura ble allocations which cannot be dominated, in terms of ex ante expected uti lity functions, by state-wise feasible and private information measurable n et trades of any coalition. It is coalitionally Bayesian incentive compatib le and also takes into account the information superiority of an individual . We provide a noncooperative extensive form interpretation of the private core for three person games. We construct game trees which indicate the seq uence of decisions and the information sets, and explain the rules for calc ulating ex ante expected payoffs. In the spirit of the Nash programme, the private core is thus shown to be supported by the perfect Bayesian equilibr ium of a noncooperative game. The discussion contributes not only to the de velopment of ideas but also to, the understanding of the dynamics of how co alitionally incentive compatible contracts can be realized.