Abstract In this paper we characterize a situation in which non-calculative trust has to play a role in the decision to cooperate. We then analyze the given situation in game theoretical terms and distinguish those aspects of players' decisions that are cooperative from those that may be...

This paper analyzes the effects of network positions and individual risk attitudes on individuals’ strategic decisions in an experiment where actions are strategic substitutes. The game theoretic basis for our experiment is the model of Bramoullé and Kranton (2007). In particular, we are...

This paper offers a new explanation of value-reducing mergers and stock market driven takeovers by introducing recent research on aspiration levels and individual decision making under risk. If market valuation constitutes an aspiration level for managers, we show that managers may be tempted to...

We model takeovers as a bargaining process and explain termination fees for, both, the target and the acquirer, subject to parties’ bargaining power and outside options. In equilibrium, termination fees are offered by firms with outside options in exchange for a greater share of merger...

This paper develops a framework for empirically testing several alternative game-theoretic rationales for Horn’s rule. It then presents an economic laboratory experiment where these rationales are empirically tested. Subjects seem to coordinate on Horn’s rule where efficiency acts...

We model takeovers as a bargaining process and explain the existence and net effect of target as well as bidder termination fees, subject to bargaining power and outside options. In equilibrium, net termination fees (target minus acquirer fees) are offered by firms with a superior bargaining...

This paper develops a model of firm dynamics in global competition and experimentally analyzes multinational growth strategies and optimal coordination of innovative activities. It shows that growth and innovation strategies of operatively engaged headquarters (business or corporate) with a...

We use a panel of 4979 cross-border and domestic takeovers to test the relation between host country corruption and premiums paid for local targets. Host country corruption is negatively associated with target premiums, after correcting for other governance related factors such as political...