Article ID Journal Published Year Pages File Type
957250 Journal of Economic Theory 2011 17 Pages PDF
Abstract
I extend Myersonʼs [R. Myerson, Optimal auction design, Math. Oper. Res. 6 (1981) 58-73] ironing technique to more general objective functions. The approach is based on a generalized notion of virtual surplus which can be maximized pointwise even when the monotonicity constraint implied by incentive compatibility binds. It is applicable to quasilinear principal-agent models where the standard virtual surplus is weakly concave in the allocation or appropriately separable in the allocation and type. No assumptions on allocation rules are required beyond monotonicity.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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