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Volume 12
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10.3390/g12020040
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Article

Private Value Takeover Auctions with Toeholds: An Experimental Study

by
Anna Dodonova
and
Yuri Khoroshilov
*
Telfer School of Management, University of Ottawa, 55 E. Laurier, Ottawa, ON K1N 6N5, Canada
*
Author to whom correspondence should be addressed.
Games 2021, 12(2), 40; https://doi.org/10.3390/g12020040
Submission received: 24 March 2021 / Revised: 18 April 2021 / Accepted: 29 April 2021 / Published: 6 May 2021
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Abstract

This paper presents the results of an experimental study of takeover auctions with toeholds. Consistent with the theory, we find a positive effect of toeholds on bidding. Such an effect, however, is of a lower magnitude and the bidding premium function has an opposite slope than the theory predicts, which can be attributed both to risk aversion and subjects’ tendency to think of their bids in relative terms. Consistent with the theory we find no cross-bidder toehold effect, however, such a result is inconsistent with the observed bidding function if people expect their opponents to behave the same way as they do.
Keywords: auction; takeover; toehold auction; takeover; toehold

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MDPI and ACS Style

Dodonova, A.; Khoroshilov, Y. Private Value Takeover Auctions with Toeholds: An Experimental Study. Games 2021, 12, 40. https://doi.org/10.3390/g12020040

AMA Style

Dodonova A, Khoroshilov Y. Private Value Takeover Auctions with Toeholds: An Experimental Study. Games. 2021; 12(2):40. https://doi.org/10.3390/g12020040

Chicago/Turabian Style

Dodonova, Anna, and Yuri Khoroshilov. 2021. "Private Value Takeover Auctions with Toeholds: An Experimental Study" Games 12, no. 2: 40. https://doi.org/10.3390/g12020040

APA Style

Dodonova, A., & Khoroshilov, Y. (2021). Private Value Takeover Auctions with Toeholds: An Experimental Study. Games, 12(2), 40. https://doi.org/10.3390/g12020040

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