A Cooperative Game of Information Trading: The Core, the Nueleolus and the Kernel

Abstract: A certain trade of the information about a technological innovation between the initial owner of the information and n identical producers is studied by means of a cooperative game theoretic approach. The information trading situation is modelled as a cooperative (n + 1)-person game with side payments. The symmetrical strong e-cores (including the core), the nucleolus and the kernel of the cooperative game model are determined. Interpretations of these game theoretic solu-tions and their implications for the information trading problem are given. 1 An Economic Model of Information Trading We consider an industry consisting of a fixed number of identical producers of which all produce the same homogeneous output with the same technology. The profit level of each producer is identical and expressed in terms of monetary units. In addition to the producers there is another agent who possesses the infor-mation about a technological innovation. The new technology may increase the monetary profit level of the producers who acquire and utilize it, but may de-crease the profit level of the producers who don't purchase it and continue to use the old technology. Due to an external diseconomy, the profit level of every pro