# Optimal bunching without optimal control

## Author Info

• Noldeke,G.
• Samuelson,L.

(University of Wisconsin-Madison, Social Systems Research Institute)

## Abstract

This paper presents simple suÂ±cient conditions under which optimal bunches in adverse-selection principal-agent problems can be characterized without using optimal control theory.

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## Bibliographic Info

Paper provided by Wisconsin Madison - Social Systems in its series Working papers with number 13.

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Handle: RePEc:att:wimass:200513

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Postal: UNIVERSITY OF WISCONSIN MADISON, SOCIAL SYSTEMS RESEARCH INSTITUTE(S.S.R.I.), MADISON WISCONSIN 53706 U.S.A.

## Related research

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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
• D40 - Microeconomics - - Market Structure and Pricing - - - General
• D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

## References

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1. Robert C. Feenstra & Tracy R. Lewis, 1987. "Negotiated Trade Restrictions with Private Political Pressure," NBER Working Papers 2374, National Bureau of Economic Research, Inc.
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4. Wilson, Robert, 1997. "Nonlinear Pricing," OUP Catalogue, Oxford University Press, number 9780195115826.
5. Jullien, Bruno, 1997. "Participation Constraints in Adverse Selection Models," IDEI Working Papers 67, Institut d'Économie Industrielle (IDEI), Toulouse.
6. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
7. Eric Maskin & John Riley, 1984. "Monopoly with Incomplete Information," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 171-196, Summer.
8. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, January.
9. 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.
10. David P. Baron & Roger B. Myerson, 1979. "Regulating a Monopolist with Unknown Costs," Discussion Papers 412, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
11. 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.
12. Paul Milgrom & Ilya Segal, 2002. "Envelope Theorems for Arbitrary Choice Sets," Econometrica, Econometric Society, vol. 70(2), pages 583-601, March.
13. Goldman, M Barry & Leland, Hayne E & Sibley, David S, 1984. "Optimal Nonuniform Prices," Review of Economic Studies, Wiley Blackwell, vol. 51(2), pages 305-19, April.
14. Lewis, Tracy R. & Sappington, David E. M., 1989. "Countervailing incentives in agency problems," Journal of Economic Theory, Elsevier, vol. 49(2), pages 294-313, December.
15. Glosten, Lawrence R, 1994. " Is the Electronic Open Limit Order Book Inevitable?," Journal of Finance, American Finance Association, vol. 49(4), pages 1127-61, September.
16. Milgrom, P. & Shannon, C., 1991. "Monotone Comparative Statics," Papers 11, Stanford - Institute for Thoretical Economics.
17. Rochet, J. C., 1985. "The taxation principle and multi-time Hamilton-Jacobi equations," Journal of Mathematical Economics, Elsevier, vol. 14(2), pages 113-128, April.
18. Lewis, Tracy R & Sappington, David E M, 1989. "Inflexible Rules in Incentive Problems," American Economic Review, American Economic Association, vol. 79(1), pages 69-84, March.
19. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, January.
20. Maggi G. & Rodriguez-Clare A., 1995. "On Countervailing Incentives," Journal of Economic Theory, Elsevier, vol. 66(1), pages 238-263, June.
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## Citations

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Cited by:
1. David Martimort & Aggey Semenov & Lars Stole, 2013. "A Theory of Contracts with Limited Enforcement," Working Papers E1304E, University of Ottawa, Department of Economics.
2. Toikka, Juuso, 2011. "Ironing without control," Journal of Economic Theory, Elsevier, vol. 146(6), pages 2510-2526.
3. Mailath, George J. & Nöldeke, Georg, 2008. "Does competitive pricing cause market breakdown under extreme adverse selection?," Journal of Economic Theory, Elsevier, vol. 140(1), pages 97-125, May.
4. Hector Chade & Edward Schlee, 2008. "Optimal Insurance with Adverse Selection," Levine's Working Paper Archive 122247000000002175, David K. Levine.
5. Ruiz del Portal, X., 2009. "A general principal-agent setting with non-differentiable mechanisms: Some examples," Mathematical Social Sciences, Elsevier, vol. 57(2), pages 262-278, March.
6. Christian Ewerhart, 2013. "Regular type distributions in mechanism design and $$\rho$$ -concavity," Economic Theory, Springer, vol. 53(3), pages 591-603, August.

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