Screening for Choice Sets

2026-01-22

AI Summary

This study addresses the screening problem in which an agent, after privately observing a feasible technology set, strategically discloses information to a principal. Assuming that technology sets are ordered by inclusion, the authors employ tools from mechanism design and information economics to construct an optimal mechanism that maximizes the principal’s expected utility while satisfying the agent’s incentive compatibility and participation constraints. The key contribution lies in characterizing the optimal promised utility: it is weakly increasing in the size of the disclosed set and closely tied to the utility function under complete information—either matching it exactly or remaining locally constant. Moreover, the number of such constant segments is bounded by the number of decreasing segments in the complete-information benchmark utility function, thereby revealing a fundamental link between information disclosure and mechanism efficiency.

Technology Category

• Game Theory and Economic Paradigms: Mechanism Design
• Multiagent Systems: Mechanism Design
• Reasoning under Uncertainty: Decision/Utility Theory

Application Category

• Economics, Online Markets and Human Computation: Incentives in network design for Web infrastructures and ecosystems
• Security and Privacy: Privacy-enhancing technologies
• Responsible Web: Social and technical mechanisms of refusal for web technologies and applications

Abstract

We study a screening problem in which an agent privately observes a set of feasible technologies and can strategically disclose only a subset to the principal. The principal then takes an action whose payoff consequences for both players are publicly known. Under the assumption that the possible technology sets are ordered by set inclusion, we show that the optimal mechanism promises the agent a utility that is weakly increasing as the reported set expands, and the choice of the principal maximizes her own utility subject to this promised utility constraint. Moreover, the optimal promised utility either coincides with the agent's utility under the complete information benchmark or remains locally constant, with the number of constant segments bounded by the number of downward-sloping segments of the complete information benchmark.

Problem

• screening
• strategic disclosure
• choice sets
• principal-agent
• information asymmetry

Innovation

• screening
• strategic disclosure
• choice sets
• mechanism design
• information revelation