Efficient design with interdependent valuations

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 signa ls are multi-dimensional, the congruence condition is determined by an inte grability constraint, and it can hold only in nongeneric cases where values are private or a certain symmetry assumption holds. If signals are one-dim ensional, the congruence condition reduces to a monotonicity constraint and it can be generically satisfied. We apply the results to the study of mult i-object auctions, and we discuss why such auctions cannot be reduced to on e-dimensional models without loss of generality.