Topic
Bidding
About: Bidding is a research topic. Over the lifetime, 15371 publications have been published within this topic receiving 294233 citations. The topic is also known as: competitive bidding.
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TL;DR: In this article, the authors characterize the set of incentive-compatible and individually rational trading mechanisms, and give a simple necessary and sufficient condition for such mechanisms to dissolve the partnership ex post efficiently.
Abstract: Several partners jointly own an asset that may be traded among them. Each partner has a valuation for the asset; the valuations are known privately and drawn independently from a common probability distribution. We characterize the set of all incentive-compatible and interim- individually- rational trading mechanisms, and give a simple necessary and sufficient condition for such mechanisms to dissolve the partnership ex post efficiently. A bidding game is constructed that achieves such dissolution whenever it is possible. Despite incomplete information about the valuation of the asset, a partnership can be dissolved ex post efficiently provided no single partner owns too large a share; this contrasts with Myerson and Satterthwaite's result that ex post efficiency cannot be achieved when the asset is owned by a single party.
346 citations
TL;DR: In this article, the authors examined the bidding for school milk contracts in Florida and Texas during the 1980s and showed that both forms of cartel agreements are almost optimal, provided the number of contracts is sufficiently large.
Abstract: This paper examines the bidding for school milk contracts in Florida and Texas during the 1980s. In both states firms were convicted of bid-rigging. The data and legal evidence suggest that the cartels in the two states allocate contracts in different ways: One cartel divides the market among members, while the other cartel also uses side payments to compensate members for refraining from bidding. We show that both forms of cartel agreements are almost optimal, provided the number of contracts is sufficiently large. In the auction the cartel bidder may face competition from non-cartel bidders. The presence of an optimal cartel induces an asymmetry in the auction. The selected cartel bidder is bidding as a representative of a group and has on average a lower cost than a non-cartel bidder. The data support the predicted equilibrium bidding behaviour in asymmetric auctions in accordance with optimal cartels.
341 citations
TL;DR: In this paper, the authors show that decreasing absolute risk aversion implies ex post inefficiency with positive probability, which is necessary for pure strategy equilibrium bidding functions to exist in wine auctions.
341 citations
TL;DR: In this article, two simple theoretical models of rational bidding at sealed-bid auctions are mapped into an empirical specification, and applied this empirical framework to data from a sample of tree planting contract auctions held in the province of British Columbia, Canada.
339 citations
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TL;DR: In this article, the authors examined 392 bidder firms during the 1960s and found that the highest bidder returns when financially unconstrained' buyers acquire constrained' targets, and that bidders generally retain target management, suggesting that management may have provided company-specific operational information, while the bidder provided capital-budgeting expertise.
Abstract: One possible explanation that bidding firms earned positive abnormal returns in diversifying acquisitions in the 1960s is that internal capital markets were expected to overcome the information deficiencies of the less developed capital markets. Examining 392 bidder firms during the 1960s, we find the highest bidder returns when financially unconstrained' buyers acquire constrained' targets. This result holds while controlling for merger terms and for different proxies used to classify firms facing costly external financing. We also find that bidders generally retain target management, suggesting that management may have provided company-specific operational information, while the bidder provided capital-budgeting expertise.
338 citations