Search mechanisms (Q1098748)
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scientific article; zbMATH DE number 4037548
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| default for all languages | No label defined |
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| English | Search mechanisms |
scientific article; zbMATH DE number 4037548 |
Statements
Search mechanisms (English)
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1988
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Extending the Revelation Principle to a case in which it is costly for the principal to communicate with any agent, we show that there is a sequential direct mechanism that is optimal in the class of all mechanisms. We then apply this result to the problem of a monopsonist seeking to buy an indivisible good from one of a set of possible sellers with unobservable production costs. With costly communication, the monopsonist's optimal procurement mechanism is a combination of reservation-price search and auction.
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Revelation Principle
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sequential direct mechanism
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monopsonist
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unobservable production costs
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costly communication
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optimal procurement mechanism
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