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Sequential negotiations with costly information acquisition

Romans Pancs

Games and Economic Behavior, 2013, vol. 82, issue C, 522-543

Abstract: Negotiations about a merger or acquisition are often sequential and only partially disclose to bidders information about each otherʼs bids. This paper explains the seller optimality of partial disclosure in a single-item private-value auction with two bidders. Each bidder can inspect the item at a nonprohibitive cost. If a revenue-maximizing seller cannot charge bidders for the information about the otherʼs bid, then the seller optimally runs a sequential second-price auction with a reserve price and a buy-now price. The seller prefers to keep the bids confidential and, sometimes, to hide the order in which he approaches the bidders.

Keywords: Sequential negotiations; Buy-now price; Strategic bid disclosure (search for similar items in EconPapers)
JEL-codes: D44 D82 D83 (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1016/j.geb.2013.08.007

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Handle: RePEc:eee:gamebe:v:82:y:2013:i:c:p:522-543