A Theory of Costly Sequential Bidding (Presentation Slides)

Forthcoming, Review of Finance, March 2018

34 Pages Posted: 31 May 2018 Last revised: 29 Jul 2018

See all articles by David A. Hirshleifer

David A. Hirshleifer

University of California, Irvine - Paul Merage School of Business; NBER

Kent D. Daniel

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Date Written: June 29, 2018

Abstract

We propose a model of sequential bidding for a valuable object, such as a takeover target, when it is costly submit or revise a bid. An implication of the model is that bidding occurs in repeated jumps, a pattern that is consistent with certain types of natural auctions such as takeover contests. The jumps in bid communicate bidders' information rapidly, leading to contests that are completed with a small number of bids. The model provides several new results concerning revenue and efficiency relationships between different auctions, and provides an information-based interpretation of delays in bidding.

Prepublication version available at https://ssrn.com/abstract=161013.

Keywords: sequential bidding, auctions, takeover bidding, revenue equivalence

JEL Classification: G34, D44

Suggested Citation

Hirshleifer, David A. and Daniel, Kent D., A Theory of Costly Sequential Bidding (Presentation Slides) (June 29, 2018). Forthcoming, Review of Finance, March 2018. Available at SSRN: https://ssrn.com/abstract=3181599

David A. Hirshleifer (Contact Author)

University of California, Irvine - Paul Merage School of Business ( email )

Irvine, CA California 92697-3125
United States

HOME PAGE: http://sites.uci.edu/dhirshle/

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Kent D. Daniel

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States
212-854-4679 (Phone)
212-854-4679 (Fax)

HOME PAGE: http://kentdaniel.net/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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