Extreme Points and Majorization: Economic Applications

Andreas Kleiner (), Benny Moldovanu () and Philipp Strack ()

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: We characterize the set of extreme points of monotonic functions that are either majorized by a given function f or themselves majorize f and show that these extreme points play a crucial role in many economic design problems. Our main results show that each extreme point is uniquely characterized by a countable collection of intervals. Outside these intervals the extreme point equals the original function f and inside the function is constant. Further consistency conditions need to be satisfied pinning down the value of an extreme point in each interval where it is constant. We apply these insights to a varied set of economic problems: equivalence and optimality of mechanisms for auctions and (matching) contests, Bayesian persuasion, optimal delegation, and decision making under uncertainty.

JEL-codes: D81 D82 (search for similar items in EconPapers)
Pages: 51
Date: 2021-04
New Economics Papers: this item is included in nep-des
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Citations: View citations in EconPapers (52)

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Journal Article: Extreme Points and Majorization: Economic Applications (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2021_288

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