We show that open ascending auctions are prone to inefficient rushes, i.e. all bidders quitting at the same price, in market environments such as privatizations, takeover contests, and procurement auctions. Rushes arise when an incumbent with better information about a common value component of...

We analyze a setting common in privatizations, public tenders, and takeovers in which the ex post efficient allocation, i.e., the first best, is not implementable. Our first main result is that the open ascending auction is not second best because it is prone to rushes, i.e., all active bidders...

We characterize the incentive compatible allocation that maximizes the expected social surplus in a single-unit sale when the efficient allocation is not implementable. We then show that allowing for the possibility that the good remains unsold may increase the expected social surplus even when...

We extend Myerson's (1981) model by allowing for uncertainty about the number of bidders. In such extension the Revenue Equivalence Theorem still holds and the optimal allocation rule remains the same. Hence, the optimal auction can be implemented with an appropriate reserve price. Nonetheless,...

This paper constructs a model of directed search in the interbank market and tests its empirical implications with data from the Libor benchmark setting process. Interbanking rates were until recently based on judgmental estimates of borrowing costs published by a panel of banks. We interpret...