We compare the two most common bidding processes for selling a company or other asset when participation is costly to buyers. In an auction all entry decisions are made prior to any bidding. In a sequential bidding process earlier entrants can make bids before later entrants choose whether to...

We run experiments on English Auctions where the bidders already own a part (toehold) of the good for sale. The theory predicts a very strong effect of even small toeholds, however we find the effects are not so strong in the lab. We explain this by analyzing the flatness of the payoff...

In this paper, we empirically identify rational overbidding using evidence from Hong Kong land auctions. In particular, we test for rational overbidding through a toehold effect in bidding behavior (Burkart (1995), Bulow, Huang and Klemperer, (1999)). In Hong Kong, auctions are widely used by...

Swedish bankruptcy filing automatically terminates CEO employment and triggers an auction of the firm. Critics of this system warn of excessive shareholder risk-shifting incentives prior to filing. We argue that private benefits of control induce managerial conservatism that may override...

We study for a sample of international mergers and acquisitions the effectiveness of three takeover bidding strategies first in preventing bidder contests and second, if a contest has occurred, in increasing the probability of a successful offer. Our results indicate that support for the...

In a private values, open auction, we show that bidder surplus can be expressed as a simple difference between unconditional moments of order statistics. The strength of the result is its simplicity and generality, as we dispense with the typical assumptions of independence and/or symmetry. We...

We study strategic initiation of auctions by potential buyers and the seller. This problem arises in auctions of companies and asset sales, among other contexts. The bidder's decision to approach the seller reveals that her valuation is sufficiently high. In common-value auctions, such as...

This paper analyses the efficiency of the Texas shootout and ½-auction partnership dissolution mechanisms when one of the partners has a chance to observe the other partner's valuation. The efficiency of the Texas shootout mechanism positively depends on the probability of such observation...

This paper develops an auction design framework to analyze various methods for assessing “fair value” in post-merger appraisal proceedings. Our inquiry spotlights an approach recently embraced by some courts benchmarking fair value against the merger price itself. We show that merger price...

This paper analyzes securities auctions for which bidders have an option to acquire information after winning the right to develop a project. The payment in the securities auctions consists of an up-front cash bid and a contingent security bid. The contingent payment distorts investment and...