We examine optimal auction design when buyers may receive future outside offers. The winning bidder choose to default upon observing her offer. Under the mechanism, with highest value wins if and only is above a cutoff, winner never defaults. takes form of second-price reserve price deposit by bidder. regularity conditions, both increase distribution offers worsens. (JEL D44, D82)

Article history: Received 30 November 2007 Available online 31 August 2011 JEL classification: D82 D83

Article history: Received 3 September 2010 Available online 21 June 2011 JEL classification: C72 D82

Article history: Received 13 July 2009 Available online xxxx JEL classification: C72 D82

Article history: Received 7 March 2006 Available online 19 March 2009 JEL classification: D82 J33 M50

Article history: Received 7 May 2013 Available online 9 February 2015 JEL classification: D44 D82 G00

Article history: Received 5 May 2010 Available online 30 August 2012 JEL classification: D82