The present paper investigates
the multi-dimensional mechanism design in which
buyers have taste and budget as their private information. The paper shows an easy proof of a two-dimensional optimal
direct mechanism by aone-dimensional
indirect mechanism: A canonical mechanism in the traditional
one-dimensional setting, i.e., function
of one variable, the buyer’s
taste. It also sheds light on where the
difficulty lies implementability of a general direct mechanism—not optimal—by a canonical mechanism.
Rochet, J.C. and Stole, L. (2003) The Economics of Multidimensional Screening. In: Dewatripont, M., Hansen, L. and Turnovski, S., Eds., Advances in Economics and Econometrics: Theory and Applications, Eighth World Congress, Volume 1, Chapter 5, Cambridge University Press.
https://doi.org/10.1017/cbo9780511610240.006
Che, Y.K. and Gale, I. (2000) The Optimal Mechanism for Selling to a Budget-Constrained Buyer. Journal of Economic Theory, 92, 198-233.
https://doi.org/10.1006/jeth.1999.2639
Kojima, N. (2014) Mechanism Design to the Budget Constrained Buyer: A Canonical Mechanism Approach. International Journal of Game Theory, 43, 693-719.
https://doi.org/10.1007/s00182-013-0403-9
