Technology Category
Game Theory and Economic Paradigms: Mechanism DesignMultiagent Systems: Mechanism DesignSearch and Optimization: Mixed Discrete/Continuous Search
Screening Frontiers
🤖 AI Summary
This study addresses the design of screening mechanisms that are optimal for any allocation set and for agents with comonotonic preferences within a principal–agent framework. To this end, it introduces the novel concept of the “surplus elasticity frontier,” which constructs an optimal menu by ordering allocations according to demand curves and imposing specific elasticity conditions. This approach achieves universal optimality across both deterministic and randomized mechanisms, without requiring assumptions on type distributions or welfare weights. Grounded in microeconomic theory, mechanism design, and demand elasticity analysis, the proposed framework offers a unified theoretical foundation and new insights for diverse applications, including optimal bundling, optimal taxation, information selling, and the regulation of data monopolies.
Technology Category
Application Category
📝 Abstract
A principal screens an agent with an arbitrary set of allocations $X$. The agent's preferences over allocations are comonotonic. A subset of allocations $X^*\subseteq X$ is a surplus-elasticity frontier if (i) any other allocation has a demand curve that is pointwise lower and less elastic than some allocation in $X^*$ and (ii) the allocations in $X^*$ can be ordered in terms of their demand curves such that a higher demand curve is more inelastic. We show that any surplus-elasticity frontier is an optimal menu. Moreover, if the incremental demand curves along the frontier are also ordered by their elasticities, then the frontier is optimal even among stochastic mechanisms. The result is agnostic to type distributions and redistributive welfare weights -- the same frontier remains optimal for a broad class of objectives. As applications, we show how these results immediately yield new insights into optimal bundling, optimal taxation, sequential screening, selling information, and regulating a data-rich monopolist.
Problem
Research questions and friction points this paper is trying to address.
screening
surplus-elasticity frontier
comonotonic preferences
optimal menu
demand elasticity
Innovation
Methods, ideas, or system contributions that make the work stand out.
surplus-elasticity frontier
comonotonic preferences
optimal mechanism design
demand elasticity
stochastic mechanisms
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