Duality in Procurement Design

Alejandro Manelli and Daniel R. Vincent, Journal of Mathematical Economics 40(3), 411-428, June .


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.

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