Template-Type: ReDIF-Paper 1.0
Title: Extreme Points and Majorization: Economic Applications
Author-Name: Andreas Kleiner
Author-Email: 
Author-Name: Benny Moldovanu
Author-Email: 
Author-Name: Philipp Strack
Author-Email:

Classification-JEL: D81, D82
Keywords: 

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.

Note: 
Length: 51
Creation-Date: 2021-04
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp288
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2021_288