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Efficient design with interdependent valuations

Jehiel, P; Moldovanu, B; (2001) Efficient design with interdependent valuations. ECONOMETRICA , 69 (5) 1237 - 1259.

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We study efficient, Bayes-Nash incentive compatible mechanisms in a social choice setting that allows for informational and 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 an integrability constraint, and it can hold only in nongeneric cases where values are private or a certain symmetry assumption holds. 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.

Type: Article
Title: Efficient design with interdependent valuations
Keywords: efficient mechanisms, multi-object auctions, interdependent valuations, multidimensional information, MECHANISM DESIGN, AUCTIONS
UCL classification: UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of SandHS > Dept of Economics
URI: http://discovery.ucl.ac.uk/id/eprint/12631
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