Stochastic Mechanisms and Quasi-Linear Preferences
AbstractAbstract: Many optimal contracting papers use quasi-linear preferences. To exclude stochastic mechanisms they impose a (sufficient) condition on how the curvature of an agent's objective function varies with type. We show with quasi-linear preferences that an optimal deterministic outcome without bunching implies that stochastic mechanisms are not optimal (without any additional assumptions).
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2012-047.
Date of creation: 2012
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stochastic mechanisms; contract theory; quasi-linear preferences;
Find related papers by JEL classification:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-07-01 (All new papers)
- NEP-MIC-2012-07-01 (Microeconomics)
- NEP-ORE-2012-07-01 (Operations Research)
- NEP-UPT-2012-07-01 (Utility Models & Prospect Theory)
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