Document Type
Discussion Paper
Publication Date
3-1-2015
CFDP Number
1993
CFDP Pages
55
Abstract
We use the theory of abstract convexity to study adverse-selection principal-agent problems and two-sided matching problems, departing from much of the literature by not requiring quasilinear utility. We formulate and characterize a basic underlying implementation duality. We show how this duality can be used to obtain a sharpening of the taxation principle, to obtain a general existence result for solutions to the principal-agent problem, to show that (just as in the quasilinear case) all increasing decision functions are implementable under a single crossing condition, and to obtain an existence result for stable outcomes featuring positive assortative matching in a matching model.
Recommended Citation
Nöldeke, Georg and Samuelson, Larry, "The Implementation Duality" (2015). Cowles Foundation Discussion Papers. 2422.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/2422