Szalay, Dezsö and Blackorby, Charles, 1937- (2007) Multidimensional screening, affliation, and full separation. Working Paper. University of Warwick, Department of Economics, [Coventry].

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Abstract

We solve a class of two-dimensional screening problems in which one dimension has the standard features, while the other dimension is impossible to exaggerate and enters the agent's utility only through the message but not the true type. Natural applications are procurement and regulation where the producer's ability to produce quality and his costs of producing quantity are both unknown; or selling to a budget constrained buyer. We show that under these assumptions, the orthogonal incentive constraints are necessary and sufficient for the full set of incentive constraints. Provided that types are affiliated and all the conditional distributions of types have monotonic inverse hazard rates, the solution is fully separating in both dimensions.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HA Statistics
Divisions:	Faculty of Social Sciences > Economics Other > Learning and Development Centre
Library of Congress Subject Headings (LCSH):	Procurement -- Mathematical models
Series Name:	Warwick economic research papers
Publisher:	University of Warwick, Department of Economics
Place of Publication:	[Coventry]
Date:	6 June 2007
Number:	No.802
Number of Pages:	28
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Description:	Working paper.
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URI:	http://wrap.warwick.ac.uk/id/eprint/123

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