Ironing Without Control

Juuso Toikka
2007 Social Science Research Network  
I extend Myerson's [R. Myerson, Optimal auction design, Math. Oper. Res. 6 (1981) 58-73] ironing technique to more general objective functions. The approach is based on a generalized notion of virtual surplus which can be maximized pointwise even when the monotonicity constraint implied by incentive compatibility binds. It is applicable to quasilinear principalagent models where the standard virtual surplus is weakly concave in the allocation or appropriately separable in the allocation and
more » ... . No assumptions on allocation rules are required beyond monotonicity.
doi:10.2139/ssrn.1019681 fatcat:t2fazx47xfgxpkulnlikuf7ale