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Countervailing incentives in adverse selection models. A synthesis

Listed author(s):
  • Aguirre Pérez, Iñaki
  • Beitia Ruiz de Mendarozqueta, María Aranzazu

In this paper we propose a simple method of characterizing countervailing incentives in adverse selection problems. The key element in our characterization consists of analyzing properties of the full information problem. This allows solving the principal problem without using optimal control theory. Our methodology can also be applied to different economic settings: health economics, monopoly regulation, labour contracts, limited liabilities and environmental regulation.

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File URL: https://addi.ehu.es/handle/10810/14765
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Paper provided by Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I in its series IKERLANAK with number Ikerlanak;2014-84.

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Date of creation: Dec 2014
Handle: RePEc:ehu:ikerla:14765
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Order Information: Postal: Dpto. de Fundamentos del Análisis Económico I, Facultad de CC. Económicas y Empresariales, Universidad del País Vasco, Avda. Lehendakari Aguirre 83, 48015 Bilbao, Spain
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  1. Armstrong, Mark & Porter, Robert, 2007. "Preface to the Handbook of Industrial Organization, Volume 3," Handbook of Industrial Organization, Elsevier.
  2. 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.
  3. Armstrong, Mark, 1999. "Optimal Regulation with Unknown Demand and Cost Functions," Journal of Economic Theory, Elsevier, vol. 84(2), pages 196-215, February.
  4. Sheriff, Glenn, 2008. "Optimal environmental regulation of politically influential sectors with asymmetric information," Journal of Environmental Economics and Management, Elsevier, vol. 55(1), pages 72-89, January.
  5. Laffont, Jean-Jacques & Tirole, Jean, 1990. "The regulation of multiproduct firms : Part I: Theory," Journal of Public Economics, Elsevier, vol. 43(1), pages 1-36, October.
  6. Laffont, Jean-Jacques & Tirole, Jean, 1986. "Using Cost Observation to Regulate Firms," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 614-641, June.
  7. Laffont, Jean-Jacques & Tirole, Jean, 1990. "The regulation of multiproduct firms : Part II: Applications to competitive environments and policy analysis," Journal of Public Economics, Elsevier, vol. 43(1), pages 37-66, October.
  8. Myerson, Roger B, 1979. "Incentive Compatibility and the Bargaining Problem," Econometrica, Econometric Society, vol. 47(1), pages 61-73, January.
  9. repec:ebl:ecbull:v:10:y:2007:i:2:p:1-7 is not listed on IDEAS
  10. 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.
  11. Charles J. Corbett & Deming Zhou & Christopher S. Tang, 2004. "Designing Supply Contracts: Contract Type and Information Asymmetry," Management Science, INFORMS, vol. 50(4), pages 550-559, April.
  12. Bontems, Philippe & Bourgeon, Jean-Marc, 2000. "Creating countervailing incentives through the choice of instruments," Journal of Public Economics, Elsevier, vol. 76(2), pages 181-202, May.
  13. Araujo, Aloisio & Moreira, Humberto, 2010. "Adverse selection problems without the Spence-Mirrlees condition," Journal of Economic Theory, Elsevier, vol. 145(3), pages 1113-1141, May.
  14. 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.
  15. Nien-Pen Liu & Dachrahn Wu, 2007. "New Explanations for the Firm Size-Wage Premium," Economics Bulletin, AccessEcon, vol. 10(2), pages 1-7.
  16. Mark Armstrong & Robert Porter (ed.), 2007. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 3, number 1, 00.
  17. Dana Jr. James D., 1993. "The Organization and Scope of Agents: Regulating Multiproduct Industries," Journal of Economic Theory, Elsevier, vol. 59(2), pages 288-310, April.
  18. Jebsi, Khaireddine & Thomas, Lionel, 2004. "Optimal pricing for selling a congestible good with countervailing incentives," Economics Letters, Elsevier, vol. 83(2), pages 251-256, May.
  19. Jullien, Bruno, 2000. "Participation Constraints in Adverse Selection Models," Journal of Economic Theory, Elsevier, vol. 93(1), pages 1-47, July.
  20. Armstrong, Mark & Rochet, Jean-Charles, 1999. "Multi-dimensional screening:: A user's guide," European Economic Review, Elsevier, vol. 43(4-6), pages 959-979, April.
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