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Informed principal problems in generalized private values environments

Author

Listed:
  • Mylovanov, Timofiy

    () (Department of Economics, University of Pennsylvania)

  • Tröger, Thomas

    () (Department of Economics, University of Mannheim)

Abstract

We show that a solution to the problem of mechanism selection by an informed principal exists in a large class of environments with “generalized private values”: the agents’ payoff functions are independent of the principal’s type. The solution is an extension of Maskin and Tirole’s (1990) strong unconstrained Pareto optimum. Our main condition for existence is that given any type profile the best possible outcome for the principal is the worst possible outcome for all agents. This condition is satisfied in most market environments. We also give an example for non-existence.

Suggested Citation

  • Mylovanov, Timofiy & Tröger, Thomas, 2012. "Informed principal problems in generalized private values environments," Theoretical Economics, Econometric Society, vol. 7(3), September.
  • Handle: RePEc:the:publsh:787
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    References listed on IDEAS

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    Cited by:

    1. Eduardo Perez-Richet, 2014. "Interim Bayesian Persuasion: First Steps," American Economic Review, American Economic Association, vol. 104(5), pages 469-474, May.
    2. Balkenborg, Dieter & Makris, Miltiadis, 2015. "An undominated mechanism for a class of informed principal problems with common values," Journal of Economic Theory, Elsevier, vol. 157(C), pages 918-958.

    More about this item

    Keywords

    Informed principal; mechanism design; private values; strong unconstrained Pareto optimum;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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