Decomposable Principal-Agent Problems
AbstractThis paper investigates conditions under which the adverse selection principal-agent problem can be decomposed into a collection of pointwise maximization problems. The analysis uses an extension of the type assignment approach to optimal nonuniform pricing, pioneered by Goldman, Leland and Sibley (1984), to derive simple sufficient conditions under which such a decomposition is possible. These conditions do not preclude optimal bunching that arises because virtual surplus functions violate the single-crossing property or participation constraints bind at interior types.
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Bibliographic InfoPaper provided by EconWPA in its series Microeconomics with number 0410004.
Length: 37 pages
Date of creation: 28 Oct 2004
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Note: Type of Document - pdf; pages: 37
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Other versions of this item:
- D1 - Microeconomics - - Household Behavior
- D2 - Microeconomics - - Production and Organizations
- D3 - Microeconomics - - Distribution
- D4 - Microeconomics - - Market Structure and Pricing
This paper has been announced in the following NEP Reports:
- NEP-MIC-2004-11-07 (Microeconomics)
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