Competition on Common Value Markets with Naive Traders - A Theoretical and Experimental Analysis
AbstractTheoretically and experimentally, we generalize the analysis of acquiring a company (Samuelson and Bazerman 1985) by allowing for competition of both, buyers and sellers. Naivety of both is related to the idea that higher prices exclude worse qualities. While competition of naive buyers increases prices, competition of naive sellers promotes effciency enhancing trade. Our predictions are tested experimentally.
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Bibliographic InfoPaper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2007-105.
Date of creation: 20 Dec 2007
Date of revision:
incomplete information; common value auction; experiment;
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-01-19 (All new papers)
- NEP-COM-2008-01-19 (Industrial Competition)
- NEP-EXP-2008-01-19 (Experimental Economics)
- NEP-MIC-2008-01-19 (Microeconomics)
- NEP-MKT-2008-01-19 (Marketing)
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