Nonparametric Adverse Selection Problems

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, incentiveility 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.

• Type: Journal
• Year: 2002
• Where: ANOR
• Authors: Guillaume Carlier
• Keywords: Abstract Convexity Notions, ANOR 2002, Individual Private Information, Optimal Incentive-compatible Contracts