Inefficient rushes in auctions Articles uri icon

publication date

  • January 2018

start page

  • 273

end page

  • 306


  • 1


  • 13

International Standard Serial Number (ISSN)

  • 1933-6837

Electronic International Standard Serial Number (EISSN)

  • 1555-7561


  • 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 quitting simultaneously, that undermine its efficiency. Our second main result is that the second best can be implemented with a two-round auction used in real-life privatizations. We also show how this result generalizes using a survival auction with a novel tie-breaking rule.


  • Economics


  • privatization; efficiency; auctions; mechanism design; multi-round mechanisms