On the value of randomization

Stephane Gauthier and Guy Laroque

Journal of Economic Theory, 2014, vol. 151, issue C, 493-507

Abstract: The paper identifies a necessary and sufficient condition for a deterministic local optimum to be locally improved upon by a stochastic deviation. When this condition is satisfied, a method to construct the stochastic allocations that increase the objective is provided. This technique is applied to a number of adverse selection and moral hazard problems.

Keywords: Second order conditions; Constrained optimization; Incentive constraints; Random contracts (search for similar items in EconPapers)
JEL-codes: C61 D82 D86 H21 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022053114000246
Full text for ScienceDirect subscribers only

Related works:
Working Paper: On the value of randomization (2014)
Working Paper: On the value of randomization (2014)
Working Paper: On the value of randomization (2014)
Working Paper: On the value of randomization (2014)
Working Paper: On the value of randomization (2012)
Working Paper: On the value of randomization (2011)
Working Paper: On the value of randomization (2011)
Working Paper: On the value of randomization (2011)
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:eee:jetheo:v:151:y:2014:i:c:p:493-507

DOI: 10.1016/j.jet.2014.02.006

Access Statistics for this article

Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell

More articles in Journal of Economic Theory from Elsevier
Bibliographic data for series maintained by Catherine Liu ().