Nonparametric Adverse Selection Problems

This article is devoted to adverse selection problems in which individual private information is a whole utility function and cannot be reduced to some nite-dimensional parameter. In this case, incentive compatibility conditions can be conveniently expressed using some abstract convexity notions arising in Mass Transfer Theory 8]. After this characterization is provided, an existence result of optimal incentive-compatible contracts is proved. Finally, several economic examples are considered including applications to regulation and labor contracting.