16 Pages Posted: 29 Mar 2010
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".
JEL Classification: D23, D83, G34, L21, M14
Suggested Citation: Suggested Citation
Feiler, Lauren and Camerer, Colin, Code Creation in Endogenous Merger Experiments. Economic Inquiry, Vol. 48, Issue 2, pp. 337-352, April 2010. Available at SSRN: https://ssrn.com/abstract=1578516 or http://dx.doi.org/10.1111/j.1465-7295.2009.00200.x
This is a Wiley-Blackwell Publishing paper. Wiley-Blackwell Publishing charges $38.00 .
File name: ecin.
If you wish to purchase the right to make copies of this paper for distribution to others, please select the quantity.