Ironing without control

DOI10.1016/J.JET.2011.06.003MaRDI QIDQ654524zbMATH OpenOpenAlexFDO

Authors Juuso Toikka

Publication date 28 December 2011

Published in Journal of Economic Theory (Search for Journal in Brave)

Full work available at URL https://doi.org/10.1016/j.jet.2011.06.003

zbMATH Keywords

ironingmechanism designmonotonicity constraintoptimizationprincipal-agent model

Mathematics Subject Classification ID

Multi-objective and goal programming (90C29) Auctions, bargaining, bidding and selling, and other market models (91B26)

Review text

The ``ironing technique introduced by \textit{R. B. Myerson} [``Optimal auction design, Math. Oper. Res. 6, 58--73 (1981; Zbl 0496.90099)] is extended to more general objective functions. The approach is based on a generalized notion of virtual surplus which can be maximized pointwise even when the monotonicity constraint implied by incentive compatibility is binding. The proposed technique is applicable to quasi-linear Principal-Agent models where the standard virtual surplus is weakly concave in the allocation or appropriately separable in the allocation and type. No assumptions on allocation rules are required beyond monotonicity.

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Cites work

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• The Maximum Principle under Minimal Hypotheses

Cited in

(16)

• Sequential versus static screening: an equivalence result
• Optimal profit sharing mechanisms with type-dependent outside options
• Non-linear pricing and optimal shipping policies
• Limited liability and non-responsiveness in agency models
• Insurance as a lemons market: coverage denials and pooling
• Non-convex isotonic regression via the Myersonian approach
• Two-sided unobservable investment, bargaining, and efficiency
• Efficient mechanisms with information acquisition
• An optimal slow Dutch auction
• Participation constraints in discontinuous adverse selection models
• When partner knows best: asymmetric expertise in partnerships
• Screening while controlling an externality
• Optimal allocation via waitlists: simplicity through information design
• Selling signals
• Asymmetric optimal auction design with loss-averse bidders
• Optimal mechanisms with non-quasilinear preferences

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