Econometrica Vol. 69 No. 4 2001
Convex Potentials with an Application to Mechanism Design
open access
Abstract
This paper establishes a general form of the "payoff equivalence" result in mechanism design theory: under certain conditions, the utility of any type in an incentive-compatible mechanism is determined up to an additive constant by the allocation rule alone. When types are single-dimensional the result is well known (see, for instance, Myerson (1981)). When types are multi-dimensional the result follows from the Fundamental Theorem of Calculus once sufficient smoothness is assumed. We obtain a more general result by using an extension of the Fundamental Theorem to nonsmooth convex functions and more generally, to the class of regular Lipschitzian functions.
- DOI
- 10.1111/1468-0262.00233
- Volume
- 69
- Issue
- 4
- Pages
- 1113-1119
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref