Efficient Design with Interdependent Valuations

Philippe Jehiel () and Benny Moldovanu ()

No 1244, Discussion Papers from Northwestern University, Center for Mathematical Studies in Economics and Management Science

Abstract: We study efficient, Bayes-Nash incentive compatible mechanisms in a general social choice setting that allows for informationally interdependent valuations and for allocative externalities. We show that such mechanisms exist only if a congruence condition relating private and social rates of information substitution is satisfied. If signals are multi-dimensional, the congruence condition is determined by a complex integrability constraint, and it can hold only in non-generic cases such as the private value case or the symmetric case. If signals are one-dimensional, the congruence condition reduces to a monotonicity constraint and it can be generically satisfied. We apply the results to the study of multi-object auctions, and we discuss why such auctions cannot be reduced to one-dimensional models without loss of generality.

Date: 1998-12
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Related works:
Journal Article: Efficient Design with Interdependent Valuations (2001)
Working Paper: Efficient design with interdependent valuations (1999)
Working Paper: Efficient Design with Interdependent Valuations (1999)
Working Paper: Efficient Design with Interdependent Valuations (1998)
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