Single crossing condition


Single Crossing Condition in Probability

In economics, the single-crossing condition or single-crossing property refers to how the probability distribution of outcomes changes as a function of an input and a parameter.
Cumulative distribution functions F and G satisfy the single-crossing condition if there exists a such that
and
that is, function crosses the x-axis at most once, in which case it does so from below.
This property can be extended to two or more variables. Given x and t, for all x'>x, t'>t,
and
This condition could be interpreted as saying that for x'>x, the function g=F-F crosses the horizontal axis at most once, and from below. The condition is not symmetric in the variables.
The single-crossing condition was posited in Samuel Karlin's 1968 monograph 'Total Positivity'. It was later used by Peter Diamond, Joseph Stiglitz, and Susan Athey, in studying the economics of uncertainty. The single-crossing condition is also used in applications where there are a few agents or types of agents that have preferences over an ordered set. Such situations appear often in information economics, contract theory, social choice and political economics, among other fields.

Single Crossing Condition in Mechanism Design

The term Single-Crossing Condition refers to the requirement that the isoutility curve for agents of different types cross only once. This condition guarantees that the transfer in an incentive-compatible direct mechanism can be pinned down by the transfer of the lowest type. This condition is similar to another condition called Strict Increasing Difference. Formally, suppose the agent has a utility function, the SID says we have. The Spence-Mirrlees Property is characterized by.