Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/284746 
Year of Publication: 
2021
Citation: 
[Journal:] Econometrica [ISSN:] 1468-0262 [Volume:] 89 [Issue:] 4 [Year:] 2021 [Pages:] 1557-1593
Publisher: 
Wiley, Hoboken, NJ
Abstract: 
We characterize the set of extreme points of monotonic functions that are either majorized by a given function f or themselves majorize f and show that these extreme points play a crucial role in many economic design problems. Our main results show that each extreme point is uniquely characterized by a countable collection of intervals. Outside these intervals the extreme point equals the original function f and inside the function is constant. Further consistency conditions need to be satisfied pinning down the value of an extreme point in each interval where it is constant. We apply these insights to a varied set of economic problems: equivalence and optimality of mechanisms for auctions and (matching) contests, Bayesian persuasion, optimal delegation, and decision making under uncertainty.
Subjects: 
Majorization
extreme points
mechanism design
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Article
Document Version: 
Published Version

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