Publication:
A Dual Characterization of Incentive Efficiency

Thumbnail Image
Identifiers
URI: https://hdl.handle.net/10016/5314
ISSN: 0022-0531
DOI: 10.1016/S0022-0531(03)00064-4
Files
dual_jerez_JEC_2003_ps.pdf (720.22 KB)
Publication date
2003
Defense date
Authors
Advisors
Tutors
Journal Title
Journal ISSN
Volume Title
Publisher
Elsevier
Impact
Google Scholar
Export
Research Projects
Organizational Units
Journal Issue
Abstract
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.
Description
Keywords
Asymmetric information, Incentive efficiency, Linear programming, Duality
Bibliographic citation
Journal of Economic Theory, 2003, vol. 112, nº 1, p. 1-34
Collections
DE - Artículos de Revistas
Economists Online