Auctions with Almost Common Values: The Wallet Game and its Applications
We use a classroom game, the Wallet Game, to show that slight asymmetries between bidders can have very large effects on prices in standard ascending (i.e. English) auctions of common-values objects. Examples of small asymmetries are a small value advantage for one bidder or a small ownership of the object by one bidder. The effects of these asymmetries are greatly exacerbated by entry costs or bidding costs. We discuss applications to Airwaves Auctions and Takeover Battles including the Glaxo-Wellcome Merger.
|Date of creation:||01 Sep 1997|
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