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Compulsory Disclosure of Private Information Theoretical and Experimental Results for the "Acquiring-a-Company" Game

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  • Werner Güth

    ()
    (Max Planck Institute of Economics, Strategic Interaction Group)

  • Kerstin Pull

    ()
    (University of Tübingen, School of Business and Economics)

  • Manfred Stadler

    ()
    (University of Tübingen, School of Business and Economics)

  • Alexandra Zaby

    ()
    (University of Tübingen, School of Business and Economics)

Abstract

Based on the "acquiring-a-company" game of Samuelson and Bazerman (1985), we theoretically and experimentally analyze the acquisition of a firm. Thereby we compare cases of symmetrically and asymmetrically informed buyers and sell- ers. This setting allows us to predict and test the effects of information disclosure as prescribed by two recently implemented directives of the European Union, the Transparency and the Takeover-Bid Directive. Our theoretical and experimental results suggest a welfare-enhancing effect of compulsory information disclosure. Hence, the EU Transparency and the EU Takeover-Bid Directive should both be welfare enhancing.

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Bibliographic Info

Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2014-003.

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Date of creation: 04 Feb 2014
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Handle: RePEc:jrp:jrpwrp:2014-003

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Keywords: Acquisition of firms; disclosure of private information; experimental economics;

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  1. Dittrich, Dennis Alexis Valin & Güth, Werner & Kocher, Martin G. & Pezanis-Christou, Paul, 2012. "Loss aversion and learning to bid," Munich Reprints in Economics 18205, University of Munich, Department of Economics.
    • Dennis A. V. Dittrich & Werner Güth & Martin G. Kocher & Paul Pezanis‐Christou, 2012. "Loss Aversion and Learning to Bid," Economica, London School of Economics and Political Science, vol. 79(314), pages 226-257, 04.
  2. Reinhard Selten & Klaus Abbink & Ricarda Cox, 2001. "Learning Direction Theory and the Winner’s Curse," Bonn Econ Discussion Papers bgse10_2001, University of Bonn, Germany.
  3. Brit Grosskopf & Yoella Bereby-Meyer & Max Bazerman, 2007. "On the Robustness of the Winner’s Curse Phenomenon," Theory and Decision, Springer, vol. 63(4), pages 389-418, December.
  4. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
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