TY - JOUR
T1 - Optimal allocation with costly verification
AU - Ben-Porath, Elchanan
AU - Dekel, Eddie
AU - Lipman, Barton L.
PY - 2014/12/1
Y1 - 2014/12/1
N2 - A principal allocates an object to one of I agents. Each agent values receiving the object and has private information regarding the value to the principal of giving it to him. There are no monetary transfers, but the principal can check an agent's information at a cost. A favored-agent mechanism specifies a value v∗ and an agent i∗. If all agents other than i∗ report values below v∗, then i∗ receives the good and no one is checked. Otherwise, whoever reports the highest value is checked and receives the good if and only if her report is confirmed. All optimal mechanisms are essentially randomizations over optimal favored-agent mechanisms.
AB - A principal allocates an object to one of I agents. Each agent values receiving the object and has private information regarding the value to the principal of giving it to him. There are no monetary transfers, but the principal can check an agent's information at a cost. A favored-agent mechanism specifies a value v∗ and an agent i∗. If all agents other than i∗ report values below v∗, then i∗ receives the good and no one is checked. Otherwise, whoever reports the highest value is checked and receives the good if and only if her report is confirmed. All optimal mechanisms are essentially randomizations over optimal favored-agent mechanisms.
UR - http://www.scopus.com/inward/record.url?scp=84916920380&partnerID=8YFLogxK
U2 - 10.1257/aer.104.12.3779
DO - 10.1257/aer.104.12.3779
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AN - SCOPUS:84916920380
SN - 0002-8282
VL - 104
SP - 3779
EP - 3813
JO - American Economic Review
JF - American Economic Review
IS - 12
ER -