A note on optimal allocation with costly verification

Albin Erlanson, Andreas Kleiner

Research output: Contribution to journalArticle

Abstract

We revisit the problem of a principal allocating an indivisible good with costly verification, as it was formulated and analyzed by Ben-Porath et al. (2014). We establish, in this setting, a general equivalence between Bayesian and ex-post incentive compatible mechanisms. We also provide a simple proof showing that the optimal mechanism is a threshold mechanism.

Original languageEnglish (US)
Pages (from-to)56-62
Number of pages7
JournalJournal of Mathematical Economics
Volume84
DOIs
StatePublished - Oct 1 2019

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Keywords

  • BIC and EPIC equivalence
  • Costly verification
  • Optimal mechanisms

ASJC Scopus subject areas

  • Economics and Econometrics
  • Applied Mathematics

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