The objective of this paper is to use laboratory experiments to test the dynamic theory of free riding among the target shareholders during a takeover attempt. We construct our experiments to reflect the dynamics of unconditional bidding suggested by Harrington and Prokop (1993) and the dynamics...

The objective of this paper is to use laboratory experiments to test the dynamic theory of free riding among the target shareholders during a takeover attempt. We construct our experiments to reflect the dynamics of unconditional bidding suggested by Harrington and Prokop (1993) and the dynamics...

Will generous return policies in auctions benefit bidders? We investigate this issue using second-price common-value auctions. Theoretically, we find that the bidding equilibrium is unique unless returns are free, in which case there exist multiple equilibria with different implications for...