Ironing without control
AbstractI 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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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Theory.
Volume (Year): 146 (2011)
Issue (Month): 6 ()
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Web page: http://www.elsevier.com/locate/inca/622869
Optimization; Monotonicity constraint; Mechanism design; Ironing;
Find related papers by JEL classification:
- C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
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