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Publication year
Optimal Allocation with Costly Verification
Resource type
Authors/contributors
- Ben-Porath, Elchanan (Author)
- Dekel, Eddie (Author)
- Lipman, Barton L. (Author)
Title
Optimal Allocation with Costly Verification
Abstract
A principal allocates an object to one of I agents. Each agent valuesreceiving the object and has private information regarding the valueto 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*. Ifall agents other than i* report values below v*, then i* receives thegood and no one is checked. Otherwise, whoever reports the highestvalue is checked and receives the good if and only if her report isconfirmed. All optimal mechanisms are essentially randomizationsover optimal favored-agent mechanisms. (JEL D82)
Publication
American Economic Review
Volume
104
Issue
12
Pages
3779-3813
Date
2014-12
Citation
Ben-Porath, E., Dekel, E., & Lipman, B. L. (2014). Optimal Allocation with Costly Verification. American Economic Review, 104, 3779–3813.
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