COWLES FOUNDATION FOR RESEARCH IN ECONOMICS
AT YALE UNIVERSITY

Box 208281
New Haven, CT 06520-8281

COWLES FOUNDATION DISCUSSION PAPER NO. 1846

Efficient Auctions and Interdependent Types

Dirk Bergemann, Stephen Morris, and Satoru Takahashi

January 2012

We consider the efficient allocation of a single good with interdependent values in a quasi-linear environment. We present an approach to modelling interdependent preferences distinguishing between "payoff types" and "belief types" and report a characterization of when the efficient allocation can be partially Bayesian implemented on a finite type space. The characterization can be used to unify a number of sufficient conditions for efficient partial implementation in this classical auction setting.

We report how a canonical language for discussing interdependent types — developed in a more general setting by Bergemann, Morris and Takahashi (2011) — applies in this setting and note by example that this canonical language will not allow us to distinguish some types in the payoff type — belief type language.

Keywords: Mechanism Design, Robust mechanism design, Efficient auctions, Interdepedent types, Partial implementation, Full implementation

JEL Classification: C79, D82