Monotonicity in optimal mechanisms in general quasi-linear environments with a continuum of types

Yu Chen ()
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Yu Chen: University of Graz

Economic Theory Bulletin, 2019, vol. 7, issue 2, No 10, 277-290

Abstract: Abstract This paper provides conditions for the existence of optimal mechanism, in which the assignment rule takes the monotonic form and is determined independently of the transfer rule, in a principal-agent problem with a general quasi-linear environment. It is based on a complete characterization result of incentive-compatible mechanisms by monotonicity, envelope, and lower boundary individual rationality conditions. In particular, we present a general result for such an existence, which is also applicable to the scenarios without linear payoffs or regularity (lattice-related) conditions.

Keywords: Monotonicity; Principal-agent problem; Optimal mechanism; Quasi-linear environment; Helly’s selection principle (search for similar items in EconPapers)
JEL-codes: C62 D82 D86 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1007/s40505-018-00161-1

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