A dual characterization of incentive efficiency.
We show that incentive efficient allocations in economies with adverse selection and moral hazard problems can be determined as optimal solutions to a linear programming problem and we use duality theory to obtain a complete characterization of the optima. Our dual analysis identifies welfare effect...
| Published in: | Journal of Economic Theory Vol. 112; no. 1; pp. 1 - 35 |
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| Format: | Article |
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Academic Press Inc.
September 2003
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| Online Access: | View this record in EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=ssf&AN=513147456&site=ehost-live header: @attributes: shortDbName: ssf uiTerm: 513147456 longDbName: Social Sciences Full Text (H.W. Wilson) uiTag: AN controlInfo: bkinfo: jinfo: jid: 00220531 RTH jtl: Journal of Economic Theory issn: 00220531 maglogo: N pubinfo: dt: September 2003 vid: 112 iid: 1 pid: 735 pub: Academic Press Inc. artinfo: ui: 513147456 10.1016/S0022-0531(03)00064-4 ppf: 1 ppct: 34 formats: tig: atl: A dual characterization of incentive efficiency. aug: au: Jerez, Belén su: Duality theory (Mathematics) Information theory in economics Linear programming Resource allocation -- Mathematical models sug: subj: Duality theory (Mathematics) Information theory in economics Linear programming Resource allocation -- Mathematical models ab: We show that incentive efficient allocations in economies with adverse selection and moral hazard problems can be determined as optimal solutions to a linear programming problem and we use duality theory to obtain a complete characterization of the optima. Our dual analysis identifies welfare effects associated with the incentives of the agents to truthfully reveal their private information. Because these welfare effects may generate non-convexities, incentive efficient allocations may involve randomization. Other properties of incentive efficient allocations are also derived. Copyright (c) 2003 Elsevier (USA) pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: N holdings: @attributes: islocal: N |
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