Abstract: Many optimal contracting papers use quasi-linear preferences. To exclude stochastic mechanisms they impose a (sufficient) condition on how the curvature of an agent's objective function varies with type. We show with quasi-linear preferences that an optimal deterministic outcome without bunching implies that stochastic mechanisms are not optimal (without any additional assumptions).
|Place of Publication||Tilburg|
|Number of pages||17|
|Publication status||Published - 2012|
|Name||CentER Discussion Paper|
- stochastic mechanisms
- contract theory
- quasi-linear preferences