We consider a takeover in which risk neutral bidders must incur participation costs and study their optimal strategy …

, which induces overbidding in all (first-price) auctions. In addition, it biases the perceived value distribution, which …

participants are significantly higher than predicted and that over-dissipation of rents (or overbidding or over-expenditure of …

significantly higher than predicted in the models based on rational behavior and that over-dissipation of rents (or overbidding or …

contest experiments: (i) overbidding relative to the standard Nash equilibrium prediction and (ii) heterogeneous behavior of … ex-ante symmetric contestants. Based on the sample of contest experiments that we review, the median overbidding rate is … 72%. We provide different explanations for the overbidding phenomenon, including bounded rationality, utility of winning …

. We show alternative models based upon risk aversion and anticipated regret can't explain these price dependencies. …