Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
957250 | Journal of Economic Theory | 2011 | 17 Pages |
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.
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Authors
Juuso Toikka,