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Almost Common Value Auctions: The "Wallet Game" and its Applications to Takeover Battles and Airwaves Auctions.

Abstract:
We use a classroom game, the "wallet Game", to show that in standard ascending, i.e. English, auctions of close-to-common-values objects, even slight asymmetries between bidders can have very large effects on prices. 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 exarcabated by entry costs or bidding costs. We discuss applications to Airwaves Auctions and Takeover Battles including the Glaxo-Wellcome Merger.

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Authors


Paul Klemperer More by this author
Series:
Economics Papers
Publication date:
1997
URN:
uuid:91800eb1-090d-4030-8a82-0b53d8f5cba4
Local pid:
oai:economics.ouls.ox.ac.uk:11923
Language:
English

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