Duality in Procurement Design
Alejandro Manelli and Daniel R. Vincent
,
3
(
40
)
Journal of Mathematical Economics
411-428
June
2003
Abstract
Finding an optimal mechanism in a standard adverse selection model is equivalent to solving an infinite dimensional linear program. We begin with certain feasible mechanisms—those implemented by auctions, take-it-or-leave-it offers, and combinations of these polar mechanisms—and search for the environments that make them optimal. We prove the optimality of each mechanism using the dual program.