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

Author

Listed:
  • 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.

Suggested Citation

  • Werner Güth & Kerstin Pull & Manfred Stadler & Alexandra Zaby, 2014. "Compulsory Disclosure of Private Information Theoretical and Experimental Results for the "Acquiring-a-Company" Game," Jena Economics Research Papers 2014-003, Friedrich-Schiller-University Jena.
    • Handle: RePEc:jrp:jrpwrp:2014-003
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    References listed on IDEAS

    as
    1. Nadine Chlaß, 2011. "On Individual Cursedness - How personality shapes individuals' sensitivity to incur a winner's curse -," Jena Economics Research Papers 2011-027, Friedrich-Schiller-University Jena.
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    Cited by:

    1. Benndorf, Volker & Kübler, Dorothea & Normann, Hans-Theo, 2022. "Behavioral forces driving information unraveling," Discussion Papers, Research Unit: Market Behavior SP II 2022-206, WZB Berlin Social Science Center.
    2. Werner Güth & Kerstin Pull & Manfred Stadler & Alexandra K. Zaby, 2017. "Blindfolded vs. Informed Ultimatum Bargaining – A Theoretical and Experimental Analysis," German Economic Review, Verein für Socialpolitik, vol. 18(4), pages 444-467, November.
    3. D. Di Cagno & A. Galliera & W. Güth & N. Pace & L. Panaccione, 2016. "Make-up and suspicion in bargaining with cheap talk: An experiment controlling for gender and gender constellation," Theory and Decision, Springer, vol. 80(3), pages 463-471, March.
    4. Daniela Di Cagno & Lorenzo Ferrari & Werner Güth & Vittorio Larocca, 2021. "Transparent Dealing instead of Insider Haggling - Experimentally Analyzing an Institutional Choice for Repeated Trade," CEIS Research Paper 523, Tor Vergata University, CEIS, revised 18 Feb 2023.
    5. Benndorf, Volker & Kübler, Dorothea & Normann, Hans-Theo, 2023. "Behavioral forces driving information unraveling," Discussion Papers, Research Unit: Market Behavior SP II 2023-207, WZB Berlin Social Science Center.

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    More about this item

    Keywords

    Acquisition of firms; disclosure of private information; experimental economics;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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