This paper presents the results of an experimental study of takeover auctions with toeholds. Consistent with the theory, we find a positive effect of toeholds on bidding. Such an effect, however, is of a lower magnitude and the bidding premium function has an opposite slope than the theory...

This paper investigates implications of some of the well-known behavioral biases of bidders' behavior in different types of auctions. It presents the results of an experimental study that tests the endowment hypothesis for English auctions and regret aversion hypothesis for first-price...

This paper presents the results of an experimental study aimed to understand how the past stock performance affects investor's desire to buy or sell the stock. It shows that people prefer to buy stocks that performed well in the past. However, when investors must sell one of the stocks they...

This paper argues that the presence of both profit-based and stock price-based components in compensation contracts provides senior managers the incentive to optimally allocate effort to both implementing previously devised strategies that provide current profits and to formulating new...

A lot of experimental evidence document that people are loss averse and that the compensation that they require to give up a possession of a good is higher than the amounts they agree to pay to get this possession. This paper analyzes how optimal English auction design changes when we take...

This paper develops a model of preemptive jump bidding in common value takeover auctions. It shows that in a case of common values jump bidding increases the social surplus, and, under certain conditions, can lead to higher expected seller's revenue. It also demonstrates that an increase in...

This paper presents the results of an experimental study on how people use their private information to estimate the “fair” futures price, and how the quality of this information affects the traders' behavior and desire to trade. It finds that subjects are able to use their information...

This paper presents the results of an experimental study on how people use their private information to estimate the “fair” futures price, and how the quality of this information affects the traders' behavior and desire to trade. It finds that subjects are able to use their information...

This paper presents the results of an experimental study of takeover auctions with toeholds. Consistent with the theory, we find a positive effect of toeholds on bidding. Such an effect, however, is of a lower magnitude and the bidding premium function has an opposite slope than the theory...

Empirical studies show that a large portion of the diversification discount can be explained by controlling for firm-specific characteristics. Although these studies leave no doubt that there is a self-selection component in firm's decision to diversify, the failure to explain the entire...