Competition on Common Value Markets with Naive Traders - A Theoretical and Experimental Analysis

Theoretically and experimentally, we generalize the analysis of acquiring a company (Samuelson and Bazerman 1985) by allowing for competition of both, buyers and sellers. Naivety of both is related to the idea that higher prices exclude worse qualities. While competition of naive buyers increases prices, competition of naive sellers promotes effciency enhancing trade. Our predictions are tested experimentally.

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Year of publication:	2007-12-20
Authors:	Chlaß, Nadine ; Güth, Werner
Institutions:	Wirtschaftswissenschaftliche Fakultät, Friedrich-Schiller-Universität Jena
Subject:	incomplete information \| common value auction \| experiment

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Extent:	application/pdf
Series:	Jena Economic Research Papers.
Type of publication:	Book / Working Paper
Notes:	Number 2007-105
Classification:	D01 - Microeconomic Behavior: Underlying Principles ; D42 - Monopoly ; D43 - Oligopoly and Other Forms of Market Imperfection ; D44 - Auctions ; D61 - Allocative Efficiency; Cost-Benefit Analysis ; D82 - Asymmetric and Private Information ; L13 - Oligopoly and Other Imperfect Markets ; L15 - Information and Product Quality; Standardization and Compatibility
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005090603