Almost Common Value Auctions: The 'Wallet Game' and its Applications to Takeover Battles and Airwaves Auctions

Paul Klemperer

No 1682, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We use a classroom game, the ‘Wallet Game’, to show that in standard ascending, i.e. English, auctions of close-to-common-values objects, even slight asymmetries between bidders can have very large effects on prices. Examples of small asymmetries are a small value advantage for one bidder or a small ownership of the object by one bidder; the effects of these asymmetries are greatly exacerbated by entry costs or bidding costs. We discuss applications to airwaves auctions and takeover battles including the Glaxo-Wellcome merger.

Keywords: Airwaves Auction; Auction Theory; Common Values; Corporate Acquisitions; Mergers; PCS Auction; Spectrum Auction; Takeovers; Winner's Curse (search for similar items in EconPapers)
JEL-codes: D44 G34 L96 (search for similar items in EconPapers)
Date: 1997-08
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=1682 (application/pdf)

Related works:
Working Paper: Almost Common Value Auctions: The "Wallet Game" and its Applications to Takeover Battles and Airwaves Auctions (1997)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:1682

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=1682

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().