Nonparametric Adverse Selection Problems.

This article is devoted to adverse selection problems in which individual private information is a whole utility function and cannot be reduced to some finite-dimensional parameter. In this case, incentive-compatibility conditions can be conveniently expressed using some abstract convexity notions arising for instance in Mass Transfer Theory. After this characterization is provided, an existence result of optimal incentive-compatible contracts is proved. Finally, several economic examples are considered including applications to regulation and labor contracting.