Informed-principal problems in environments with generalized private values

Tymofiy Mylovanov, Thomas Tröger

We show that a solution to the problem of mechanism selection by an informed principal exists in a large class of environments with “generalized private values”: the agents’ payoﬀ functions are independent of the principal’s type. The solution is an extension of Maskin and Tirole’s (1990) strong unconstrained Pareto optimum. Our main condition for existence is that given any type proﬁle the best possible outcome for the principal is the worst possible outcome for all agents. This condition is satisﬁed in most market environments. We also give an example for non-existence.

MoreLess

Year of publication:	September 2012
Authors:	Mylovanov, Timofiy ; Tröger, Thomas
Published in:	Theoretical economics : TE ; an open access journal in economic theory. - Toronto : [Verlag nicht ermittelbar], ISSN 1555-7561, ZDB-ID 2220447-7. - Vol. 7.2012, 3, p. 465-488
Subject:	Informed principal \| mechanism design \| private values \| strong unconstrained Pareto optimum \| Asymmetrische Information \| Asymmetric information \| Mechanismus-Design-Theorie \| Mechanism design \| Prinzipal-Agent-Theorie \| Agency theory \| Spieltheorie \| Game theory \| Pareto-Optimum \| Pareto efficiency