Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93873
Authors: 
Strausz, Roland
Year of Publication: 
2004
Series/Report no.: 
SFB/TR 15 Discussion Paper 26
Abstract: 
This paper shows that, contrary to what is generally believed, decreasing concavity of the agent's utility function with respect to the screening variable is not sufficient to ensure that stochastic mechanisms are suboptimal. The paper demonstrates, however, that they are suboptimal whenever the optimal deterministic mechanism exhibits no bunching. This is the case for most applications of the theory and therefore validates the literature's usual focus on deterministic mechanisms.
Subjects: 
principal-agent theory
mechanism design
deterministic mechanisms
randomization
bunching
JEL: 
D82
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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