CARESSWorking Paper 01–05 OnPreservation of Increasing Hazard Rate Under Convolution
نویسنده
چکیده
The increasing hazard rate (IHR) property of distributions of asymmetric information parameters play a critical role in characterizing a separating Perfect Bayesian–Nash Equilibria in screening problems. This paper studies sufficient conditions on these distributions for IHR to be preserved under convolution. When different sources of asymmetric information aggregate into a single scalar, these preservation results prove very useful in designing alternative optimal mechanisms. The paper proves that if the distributions of all convoluting parameters are IHR the resulting distribution is also IHR. This result does not necessarily requires that the corresponding densities have to be log–concave. JEL: C00, D42, D82.
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