Halil I. Bayrak | Searcharxiv

arXiv2026

Prophet Inequalities via Linear Programming

Prophet inequalities bound the expected reward that can be obtained in a stopping problem by the optimal reward of its corresponding off-line version. We propose a systematic technique for deriving prophet inequalities for stopping problems associated with selecting a point in a polyhedron. It utilizes a reduced-form linear programming representation of the stopping problem. We illustrate the technique to derive a number of known results as well as some new ones. For instance, we prove a $\frac{1}{2}$-prophet inequality when the underlying polyhedron is an on-line polymatroid; one whose underlying submodular function depends upon the realized rewards. We also demonstrate a composition by the Minkowski sum property. If an $r-$ prophet inequality holds for polyhedra $P^1$ and $P^2$, it also holds for their Minkowski sum.

econ.TH↗

arXiv2026

Distributionally Robust Contract Design with Deferred Inspection

We study a robust contract design problem with deferred inspection, in which a principal allocates a scarce resource to an agent, observes the agent's realized outcome ex post at negligible cost, and conditions transfers on this information through rewards. The principal faces ambiguity about the agent's value distribution and seeks to maximize worst-case expected revenue subject to incentive compatibility and limited liability. In contrast to existing work on inspection mechanisms, which relies on common-prior assumptions, we adopt a distributionally robust approach based on moment information. Our main contribution is a complete characterization of the robust contract design problem with a single agent. When the ambiguity set is defined by the first moment, we identify a robustly optimal contract with a concave allocation rule and a linear payment rule. We further show that robustness does not uniquely pin down transfers: we construct a Pareto robustly optimal contract that preserves the same allocation while extracting maximal feasible payments from all types, yielding strictly higher expected revenue under non-worst-case distributions. We also derive structural results for multi-agent extensions. For ambiguity sets defined by the first $N$ moments, we show that robust optimality requires aggregate payments to be lower bounded by a multi-dimensional polynomial of degree $N$. However, unlike the single-agent case, robust multi-agent mechanisms are substantially more complex: dominant-strategy incentive compatibility becomes necessary, simple monotone mechanisms are no longer tractable, and worst-case distributions may involve correlated types or degenerate to a Dirac distribution at the mean. These results highlight a sharp contrast between robust contract design and robust multi-agent mechanism design with inspection.

econ.TH↗