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Reducing incentive constraints in bidimensional screening

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  • Braulio Calagua

    (Federal University of Rio Grande do Norte, Brazil)

Abstract

Thhis paper studies screening problems with quasilinear preferences, where agents' private information is two-dimensional and the allocation instrument is one-dimensional. We define a preorder to compare types based on their marginal valuation to the instrument, which facilitates the reduction of incentive compatibility constraints that must be checked. With this approach, the discretized problem becomes computationally tractable. As an application, we numerically solve a problem introduced by Lewis and Sappington (1988).

Suggested Citation

  • Braulio Calagua, 2023. "Reducing incentive constraints in bidimensional screening," The Journal of Mechanism and Institution Design, Society for the Promotion of Mechanism and Institution Design, University of York, vol. 8(1), pages 107-150, December.
    • Handle: RePEc:jmi:articl:jmi-v8i1a5
    DOI: 10.22574/jmid.2023.12.005
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    References listed on IDEAS

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    More about this item

    Keywords

    Two-dimensional screening; incentive compatibility; regulation of a monopoly.;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • C69 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Other

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