Deterministic versus Stochastic Mechanisms in Principalâ€“Agent Models
This paper shows that, contrary to what is generally believed, decreasing concavity of the agentâ€™s utility function with respect to the screening variable is not sufficient to ensure that stochastic mechanisms are suboptimal. The paper demonstrates, however, that they are suboptimal whenever the optimal deterministic mechanism exhibits no bunching. This is the case for most applications of the theory and therefore validates the literatureâ€™s usual focus on deterministic mechanisms.
|Date of creation:||Sep 2004|
|Date of revision:|
|Contact details of provider:|| Postal: Geschwister-Scholl-Platz 1, D-80539 Munich, Germany|
Web page: http://www.sfbtr15.de/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Joseph E. Stiglitz, 1987.
"Pareto Efficient and Optimal Taxation and the New New Welfare Economics,"
NBER Working Papers
2189, National Bureau of Economic Research, Inc.
- Stiglitz, Joseph E., 1987. "Pareto efficient and optimal taxation and the new new welfare economics," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 2, chapter 15, pages 991-1042 Elsevier.
- Roger B. Myerson, 1978. "Optimal Auction Design," Discussion Papers 362, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Richard J. Arnott & Joseph E. Stiglitz, 1988.
"Randomization with Asymmetric Information,"
NBER Working Papers
2507, National Bureau of Economic Research, Inc.
- Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, December.
When requesting a correction, please mention this item's handle: RePEc:trf:wpaper:26. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tamilla Benkelberg)
If references are entirely missing, you can add them using this form.