Decomposable Principal-Agent Problems

Georg Nöldeke () and Larry Samuelson
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Larry Samuelson: Department of Economics, University of Wisconsin

Microeconomics from EconWPA

Abstract: This paper investigates conditions under which the adverse selection principal-agent problem can be decomposed into a collection of pointwise maximization problems. The analysis uses an extension of the type assignment approach to optimal nonuniform pricing, pioneered by Goldman, Leland and Sibley (1984), to derive simple sufficient conditions under which such a decomposition is possible. These conditions do not preclude optimal bunching that arises because virtual surplus functions violate the single-crossing property or participation constraints bind at interior types.

JEL-codes: D1 D2 D3 D4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mic
Date: 2004-10-28
Note: Type of Document - pdf; pages: 37
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http://129.3.20.41/eps/mic/papers/0410/0410004.pdf (application/pdf)

Related works:
Working Paper: Decomposable principal-agent problems (2004)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpmi:0410004

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