When a company goes public and sells its shares for the first time to the public in an IPO (initial public offering), there is limited information available on the company's past performance. Thus, the underwriter (or underwriter syndicate), who is tasked with selling the shares of the company in an IPO, traditionally first allocates shares to the best customer, which are usually institutional investors. This allocation ensures that even for "bad" IPOs, a minimum level of liquidity exists, which helps maintain a good reputation of the underwriter (or underwriter syndicate). The institutional investors agree to buy a certain number of shares, even in financially unattractive IPOs. As a reward, the institutional investors are also first to receive share allocations in lucrative (i.e., "good") IPOs. The underwriter (or underwriter syndicate) communicates their expectations of whether or not the IPO will be lucrative or not to the institutional investors prior to the IPO. All of these communications between the underwriter (or underwriter syndicate) and the institutional investments take place in private.

1) Is this process efficient?