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Information and Investor Behavior in the Acquiring‐a‐Company Game

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  • Mengmeng Shi
  • Shaohui Wu
  • Hang Wu

Abstract

This paper reports an experimental study examining decision‐making biases in the acquiring‐a‐company (AC) game. We examine investment behavior across 40 rounds of the AC game under conditions of risk and ambiguity. Initial experimental phases reveal participant decisions consistent with ambiguity‐seeking behavior: Investors in the ambiguity scenario submit significantly greater prices than those in the risk scenario. For the first 20 rounds of the experiment, we observe radical price adjustments towards the optimal choice in both scenarios; and the price difference between the two scenarios declines as the experiment proceeds. Interestingly, gambler's fallacy has a remarkable influence on investors' dynamic bidding behavior.

Suggested Citation

  • Mengmeng Shi & Shaohui Wu & Hang Wu, 2025. "Information and Investor Behavior in the Acquiring‐a‐Company Game," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 46(8), pages 4335-4346, December.
    • Handle: RePEc:wly:mgtdec:v:46:y:2025:i:8:p:4335-4346
    DOI: 10.1002/mde.70020
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