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Code Creation in Endogenous Merger ExperimentsLauren Feileraffiliation not provided to SSRN Colin CamererCalifornia Institute of Technology - Division of the Humanities and Social Sciences Economic Inquiry, Vol. 48, Issue 2, pp. 337-352, April 2010 Abstract: We study the conflict that can occur in a merger due to firms' use of specialized language, or "code", and whether participants accurately forecast this difficulty. After creating a shared code to describe different pictures accurately, subjects bid for extra payments to join a merged group. The two lowest bidders are placed in the merged group. Values inferred from two different bidding procedures indicate fairly accurate general appraisals of the cost of the merger, but the values of those subjects who bid the least, and choose to join the merged group, are too optimistic, reflecting an "organizational winner's curse".
Number of Pages in PDF File: 16 JEL Classification: D23, D83, G34, L21, M14 Accepted Paper SeriesDate posted: March 29, 2010Suggested CitationContact Information
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