Convexity and multi-dimensional screening for spaces with different dimensions
Optimization and Control
2011-08-19 v1 Analysis of PDEs
Abstract
We study the principal-agent problem. We show that -convexity of the space of products, a condition which appears in a recent paper by Figalli, Kim and McCann \cite{fkm}, is necessary to formulate the problem as a maximization over a convex set. We then show that when the dimension of the space of types is larger than the dimension of the space of products, this condition implies that the extra dimensions do not encode independent economic information. When is smaller than , we show that under -convexity of the space of products, it is always optimal for the principal to offer goods only from a certain prescribed subset. We show that this is equivalent to offering an -dimensional space of goods.
Cite
@article{arxiv.1108.3798,
title = {Convexity and multi-dimensional screening for spaces with different dimensions},
author = {Brendan Pass},
journal= {arXiv preprint arXiv:1108.3798},
year = {2011}
}