Abstract
This article is devoted to adverse selection problems in which individual private information is a whole utility function and cannot be reduced to some finite-dimensional parameter. In this case, incentive-compatibility conditions can be conveniently expressed using some abstract convexity notions arising for instance in Mass Transfer Theory. After this characterization is provided, an existence result of optimal incentive-compatible contracts is proved. Finally, several economic examples are considered including applications to regulation and labor contracting.
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Carlier, G. Nonparametric Adverse Selection Problems. Annals of Operations Research 114, 71–82 (2002). https://doi.org/10.1023/A:1021001917492
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DOI: https://doi.org/10.1023/A:1021001917492