Private Value Takeover Auctions with Toeholds: An Experimental Study
This paper presents the results of an experimental study of takeover auctions with toeholds. Consistent with the theory, we find a positive effect of toeholds on bidding. Such an effect, however, is of a lower magnitude and the bidding premium function has an opposite slope than the theory predicts,...
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| Format: | Article |
| Language: | English |
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MDPI AG
2021-05-01
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| Series: | Games |
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| Online Access: | https://www.mdpi.com/2073-4336/12/2/40 |
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doaj-752afd9aca9d4ea0bfefec559da115212021-05-31T23:17:23ZengMDPI AGGames2073-43362021-05-0112404010.3390/g12020040Private Value Takeover Auctions with Toeholds: An Experimental StudyAnna Dodonova0Yuri Khoroshilov1Telfer School of Management, University of Ottawa, 55 E. Laurier, Ottawa, ON K1N 6N5, CanadaTelfer School of Management, University of Ottawa, 55 E. Laurier, Ottawa, ON K1N 6N5, CanadaThis paper presents the results of an experimental study of takeover auctions with toeholds. Consistent with the theory, we find a positive effect of toeholds on bidding. Such an effect, however, is of a lower magnitude and the bidding premium function has an opposite slope than the theory predicts, which can be attributed both to risk aversion and subjects’ tendency to think of their bids in relative terms. Consistent with the theory we find no cross-bidder toehold effect, however, such a result is inconsistent with the observed bidding function if people expect their opponents to behave the same way as they do.https://www.mdpi.com/2073-4336/12/2/40auctiontakeovertoehold |
| collection |
DOAJ |
| language |
English |
| format |
Article |
| sources |
DOAJ |
| author |
Anna Dodonova Yuri Khoroshilov |
| spellingShingle |
Anna Dodonova Yuri Khoroshilov Private Value Takeover Auctions with Toeholds: An Experimental Study Games auction takeover toehold |
| author_facet |
Anna Dodonova Yuri Khoroshilov |
| author_sort |
Anna Dodonova |
| title |
Private Value Takeover Auctions with Toeholds: An Experimental Study |
| title_short |
Private Value Takeover Auctions with Toeholds: An Experimental Study |
| title_full |
Private Value Takeover Auctions with Toeholds: An Experimental Study |
| title_fullStr |
Private Value Takeover Auctions with Toeholds: An Experimental Study |
| title_full_unstemmed |
Private Value Takeover Auctions with Toeholds: An Experimental Study |
| title_sort |
private value takeover auctions with toeholds: an experimental study |
| publisher |
MDPI AG |
| series |
Games |
| issn |
2073-4336 |
| publishDate |
2021-05-01 |
| description |
This paper presents the results of an experimental study of takeover auctions with toeholds. Consistent with the theory, we find a positive effect of toeholds on bidding. Such an effect, however, is of a lower magnitude and the bidding premium function has an opposite slope than the theory predicts, which can be attributed both to risk aversion and subjects’ tendency to think of their bids in relative terms. Consistent with the theory we find no cross-bidder toehold effect, however, such a result is inconsistent with the observed bidding function if people expect their opponents to behave the same way as they do. |
| topic |
auction takeover toehold |
| url |
https://www.mdpi.com/2073-4336/12/2/40 |
| work_keys_str_mv |
AT annadodonova privatevaluetakeoverauctionswithtoeholdsanexperimentalstudy AT yurikhoroshilov privatevaluetakeoverauctionswithtoeholdsanexperimentalstudy |
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1721417833500377088 |