SELF-SELECTION UNDER NON-ORDERED VALUATIONS: TYPE-SPLITTING, ENVY-CYCLES, RATIONING AND EFFICIENCY

Babu Nahata (), Sergey Kokovin and Evgeny Zhelobodko

General Economics and Teaching from EconWPA

Abstract: We analyze self-selection problem when valuations are non-ordered. The corresponding package-pricing solution has specific graph structure. It is helpful in deriving weak su±cient conditions for both partial e±ciency and Pareto-e±ciency. Unlike the ordered valuations case, Pareto e±ciency is shown to be a non-pathological case. Pareto e±ciency and positive consumer surplus are mutually exclusive. Under costs separability optimal package-pricing scheme is shown implementable by small rewards. Counter-examples show that our assumptions are essential. In certain non-ordered situations, package-optimization setting with rations is more appropriate than the standard setting.

Keywords: Principal-agent; self-selection; nonlinear pricing; package pricing; Pareto e±ciency; implementation; graph structure; envy cycles (search for similar items in EconPapers)
JEL-codes: D42 L11 (search for similar items in EconPapers)
Date: 2003-07-03
Note: Type of Document - Acrobat PDF; prepared on IBM PC ; to print on HP/PostScript; pages: 43
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpgt:0307001

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