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

Nadine Chlaß and Werner Güth ()

No 2007-105, Jena Economics Research Papers from Friedrich-Schiller-University Jena

Abstract: 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.

Keywords: incomplete information; common value auction; experiment (search for similar items in EconPapers)
JEL-codes: D01 D42 D43 D44 D61 D82 L13 L15 (search for similar items in EconPapers)
Date: 2007-12-20
New Economics Papers: this item is included in nep-com, nep-exp, nep-mic and nep-mkt
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Persistent link: https://EconPapers.repec.org/RePEc:jrp:jrpwrp:2007-105

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