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26 août 2023
- 2308.13804
Mots-clés
Economics - Theoretical EconomicsSujets proches
Ironing Economic theory Political economyCiter ce document
Nicholas C Bedard et al., « Multivariate Majorization in Principal-Agents Models », arXiv - économie
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Résumé
We introduce a definition of multivariate majorization that is new to the economics literature. Our majorization technique allows us to generalize Mussa and Rosen's (1978) "ironing" to a broad class of multivariate principal-agents problems. Specifically, we consider adverse selection problems in which agents' types are one dimensional but informational externalities create a multidimensional ironing problem. Our majorization technique applies to discrete and continuous type spaces alike and we demonstrate its usefulness for contract theory and mechanism design. We further show that multivariate majorization yields a natural extension of second-order stochastic dominance to multiple dimensions and derive its implications for decision making under multivariate risk.