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

Paul Klemperer

Economics Papers from Economics Group, Nuffield College, University of Oxford

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 exarcabated by entry costs or bidding costs. We discuss applications to Airwaves Auctions and Takeover Battles including the Glaxo-Wellcome Merger.

Keywords: PURCHASING; TAKEOVERS; TELECOMMUNICATIONS (search for similar items in EconPapers)
JEL-codes: D44 G34 L96 (search for similar items in EconPapers)
Pages: 16 pages
Date: 1997
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Citations: View citations in EconPapers (2)

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Working Paper: Almost Common Value Auctions: The 'Wallet Game' and its Applications to Takeover Battles and Airwaves Auctions (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:nuf:econwp:134

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