Screening with damages and ordeals

Filip Tokarski

Papers from arXiv.org

Abstract: A welfare-maximizing designer allocates two kinds of goods using two wasteful screening instruments: ordeals, which enter agents' utilities additively, and damages, which harm agents in proportion to their values for the goods. If agents have common valuations for one of the goods, damages always lead to Pareto-dominated mechanisms: any allocation using damages can also be implemented with ordeals alone, while also leaving greater rents to inframarginal types. However, using damages can be optimal when agents' valuations for both goods are heterogeneous: with multidimensional types, the two devices differ in how they sort agents into available options, with the optimal sorting sometimes requiring the use of damages. I nevertheless identify distributional conditions under which using damages is not optimal. In those cases, the optimal mechanism produces an efficient allocation by posting "market-clearing" ordeals for each type of good.

Date: 2025-08
New Economics Papers: this item is included in nep-des, nep-inv and nep-mic
References: Add references at CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2508.04456 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2508.04456

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().