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On the implementability of contracts without quasilinear utility

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  • Ruiz del Portal, X.

Abstract

Implementability conditions in Rochet (1987) are extended to utility functions not necessarily quasilinear in the transfer, or linear in the type, for the case where agents’ information is one-dimensional but actions become multidimensional. The results obtained are relevant for the characterization of optimal mechanisms in adverse selection and moral hazard problems.

Suggested Citation

  • Ruiz del Portal, X., 2012. "On the implementability of contracts without quasilinear utility," Economics Letters, Elsevier, vol. 116(1), pages 42-45.
    • Handle: RePEc:eee:ecolet:v:116:y:2012:i:1:p:42-45
    DOI: 10.1016/j.econlet.2011.12.103
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    References listed on IDEAS

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    1. Matthews, Steven & Moore, John, 1987. "Monopoly Provision of Quality and Warranties: An Exploration in the Theory of Multidimensional Screening," Econometrica, Econometric Society, vol. 55(2), pages 441-467, March.
    2. Laffont, Jean-Jacques & Maskin, Eric, 1979. " On the Difficulty of Attaining Distributional Goals with Imperfect Information about Consumers," Scandinavian Journal of Economics, Wiley Blackwell, vol. 81(2), pages 227-237.
    3. Paul Milgrom & Ilya Segal, 2002. "Envelope Theorems for Arbitrary Choice Sets," Econometrica, Econometric Society, vol. 70(2), pages 583-601, March.
    4. J. A. Mirrlees, 1971. "An Exploration in the Theory of Optimum Income Taxation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(2), pages 175-208.
    5. Guesnerie, Roger & Laffont, Jean-Jacques, 1984. "A complete solution to a class of principal-agent problems with an application to the control of a self-managed firm," Journal of Public Economics, Elsevier, vol. 25(3), pages 329-369, December.
    6. Rochet, Jean-Charles, 1987. "A necessary and sufficient condition for rationalizability in a quasi-linear context," Journal of Mathematical Economics, Elsevier, vol. 16(2), pages 191-200, April.
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    Citations

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    Cited by:

    1. Kos, Nenad & Messner, Matthias, 2013. "Incentive compatibility in non-quasilinear environments," Economics Letters, Elsevier, vol. 121(1), pages 12-14.
    2. Xavier Ruiz del Portal, 2020. "Two reasons for not using commodity taxation in the presence of an optimal income tax," Hacienda Pública Española / Review of Public Economics, IEF, vol. 232(1), pages 9-28, March.
    3. Patrick Legros & Mohamed Mounir Sraieb, 2015. "Money or Projects: How Should Altruistic Donors Give Aid ?," Working Papers ECARES ECARES 2015-18, ULB -- Universite Libre de Bruxelles.
    4. X. Ruiz del Portal, 2012. "Conditions for incentive compatibility in models with multidimensional allocation functions and one-dimensional types," Review of Economic Design, Springer;Society for Economic Design, vol. 16(4), pages 311-321, December.

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    More about this item

    Keywords

    Incentive compatibility; Monotonicity constraints; Optimal mechanisms;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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