information aggregation in common value auctions a key question in information economics and finance is whether prices aggregate information in a competitive environment that is when agents are endowed with private information does competition lead in the limit to prices which would occur if all information were public this paper examines the asymptotic properties of prices in common value auctions when the number of bidders becomes large the main idea in this paper is to separate the issue of information aggregation from the issue of revenue efficiency we also distinguish between the amount of information prices contain and the degree to which prices approximate the asset s value using this approach we get a simple characterization of the limiting distribution of prices we are not only able to answer whether prices converge to the asset s value but also get an explicit form for the limiting distribution prices converge to the expected value of the asset conditional on the information possessed by what we call the pivotal bidder this provides insights on how the auction format and the information structure influence the limiting behavior of prices it shows that the limiting distribution of prices can be derived from the statistical properties of certain order statistics this lets us abstract from the specific equilibrium bidding strategies for example we show that while the first and second price auction have different equilibrium strategies they share a similar limiting distribution of prices these auctions yield different limiting distributions from auctions such as the english auction or kn auction our

national cultural distance and cross border acquisition performance previous theoretical research has argued that national cultural distance hinders cross border acquisition performance by increasing the costs of integration this article tests the alternative hypothesis that national cultural distance enhances cross border acquisition performance by providing access to the target s and or the acquirer s diverse set of routines and repertoires embedded in national culture using a multi dimensional measure of national cultural distance and controlling for other effects we examine a sample of 52 cross border acquisitions that took place between 1987 and 1992 and find a positive association between national cultural distance and cross border acquisition performance

information stochastic dominance and bidding the case of treasury auctions we explore the link between informativeness of signals stochastic dominance and equilibrium bids in a multi unit auction with risk averse bidders we show that for a particular class of signal distributions informativeness is related to conditional first order stochastic dominance so that a higher degree of informativeness in the signal fundamental distribution induces higher bids and therefore higher revenues our framework is relevant for discussing total revenues and informativeness in us treasury auctions

delays and equilibria with large and small information in social learning abstract the general model of social learning with irreversible investment and endogenous timing is analyzed for any distribution of private informations strategic complementarities and multiple equilibria appear which are generated solely by information externalities different equilibria generate strikingly different amounts of information the impacts of various assumptions bounded beliefs large number of agents discrete time and short periods are examined carefully the properties are robust to the introduction of observation noise with a continuum of agents

investment dynamics with common and private values abstract we study a dynamic investment game with two dimensional signals where each firm observes its continuously distributed idiosyncratic cost of investment and a discrete signal correlated with common investment returns we demonstrate that the one step property holds and provide an equilibrium existence characterization result reversals are possible where a large number of firms investing in a given round becomes bad news about investment returns welfare is compared to static and rigid timing benchmarks and computed for large economies

what do not for profit hospitals maximize abstract massive structural change is occurring in health care provision in the united states significantly reducing the number of not for profit suppliers this trend is fueled in part by government policies to evaluate these policies one must know about the motives of not for profit health care providers the theory of not for profit hospitals suggests buyers may prefer dealing with sellers who are not acting out of avarice yet this theory does not imply the absence of rent seeking motives we formulate a test of not for profit hospitals goals and apply it to hospitals in virginia modeling average revenues as a function of caseload private medicare medicaid charity we identify prices as latent variables by analyzing the response of the estimated private price to exogenous differences in medicare medicaid and charity caseload we reject the hypothesis that not for profit hospitals maximize profits i e maximize rents for a set of agents who control the hospital we also reject pure welfare output maximization these results combined with other evidence we discuss are consistent with the hypothesis that these hospitals consider both profits and output as objectives current us government policies treat all not for profit hospitals as if they were profit maximizers these policies appear to be biased towards reenforcing the trend towards less health care provision from not for profits and our results suggest that this may not be entirely beneficial to consumers

information revelation through option exercise in many real world situations agents must formulate option exercise strategies with imperfect information in such a setting agents may infer the private signals of other agents through their observed exercise strategies the building of an office building the drilling of an exploratory oil well and the commitment of a pharmaceutical company toward the research of a new drug all convey private information to other market participants this article develops an equilibrium framework for option exercise games with asymmetric private information many interesting aspects of the patterns of equilibrium exercise are analyzed in particular informational cascades where agents ignore their private information and jump on the exercise bandwagon may arise endogenously article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

considering the investment decisions with real options games approach abstract the mix of games theory with the real options has been a dynamic range of exploration in the most recent decade the engaging quality of the specialists for displaying aggressive speculation choices by blending ideas from both hypotheses is on account of a venture choice in a focused business sector can be seen in its substance as a game between firms in this paper we expand a model to consider finite horizon real option games under incomplete information with various parameters in incomplete information games firms actions express significant information about profitability to contestants the encapsulation of this information proposed original blocks in models with strategic interactions this is because of circularity where best exercise decisions are based on previous decisions taken which at a given time are quiet to be mentioned because about the dynamic programming principle we expand an extended version of the least squares monte carlo algorithm to confront these results the model can aid in understanding the relation between strategic optionality and information besides how this influences the best decision policy and its value results we find the informational feature is of great significance for firms best decision policy and optimization of project values

the loser s curse and information aggregation in common value auctions we consider an auction in which k identical objects of unknown value are auctioned off to n bidders the k highest bidders get an object and pay the k 1st bid bidders receive a signal that provides information about the value of the object we characterize the unique symmetric equilibrium of this auction we then consider a sequence of auctions a r with n r bidders and k r objects we show that price converges in probability to the true value of the object if and only if both k r and n r k r i e both the number of objects and the number of bidders who do not receive an object go to infinity

voting behavior and information aggregation in elections with private information we analyze two candidate elections in which voters are uncertain about the realization of a state variable that affects the utility of all voters each voter has noisy private information about the state variable we show that the fraction of voters whose vote depends on their private information goes to zero as the size of the electorate goes to infinity nevertheless elections fully aggregate information in the sense that the chosen candidate would not change if all private information were common knowledge equilibrium voting behavior is to a large extent determined by the electoral rule i e if a candidate is required to get at least x percent of the vote in order to win the election then in equilibrium this candidate gets very close to x percent of the vote with probability close to one finally if the distribution from which preferences are drawn is uncertain then elections will generally not satisfy full information equivalence and the fraction of voters who take informative action does not converge to zero

reciprocity in international business a study of telecommunications alliances and contracts reciprocity has been identified as a messy concept to study within international cooperative ventures theoretically grounded in international cooperation transaction cost theory and economic anthropology reciprocity is operationalized and explored in this study specifically the effects of cultural distance economic nearness country level risk and governance mechanisms are analyzed in relationship to three distinct measures of reciprocity the international long distance industry provides the research setting during the 1980s and 1990s as this industry has become more competitive within the united states foreign partners have been slow to reciprocate regarding the sharing of revenues derived from increased overseas calling to study reciprocity between u s international long distance carriers and their partnering foreign entities a pooled time series cross sectional technique is used 11 years of contractual arrangements between the u s firms and the telecom administrations of 109 countries are analyzed governance mechanisms test as highly significant with all measures of reciprocity while the other independent variables exhibit varying degrees of significance with the respective dependent measures

strategic merger waves a theory of musical chairs this paper proposes an explanation of merger waves based on the interaction between competitive pressure and irreversibility of mergers in an uncertain environment a set of acquirers compete over time for scarce targets at each point in time an acquirer can either postpone a takeover attempt or raid immediately by postponing the takeover attempt an acquirer may gain from more favorable future market conditions but runs the risk of being preempted by rivals first a complete information model is considered and it is shown that the above tradeoff leads to a continuum of subgame perfect equilibria in monotone strategies that are strictly pareto ranked all these equilibria share the feature that all acquirers rush simultaneously in merger waves the model is then extended to a dynamic global game by introducing slightly noisy private information about merger profitability this game is shown to have a unique markov perfect bayesian equilibrium in monotone strategies and the timing of the merger wave can thus be predicted last the comparative dynamics predictions of the model are related to stylized facts

investment timing and learning externalities abstract we study a duopoly model of investment in which each player learns about the quality of a common value project by observing some public background information and possibly the experience of his rival investment costs are private information and the background signal takes the form of a poisson process conditional on the quality of the project being low the resulting attrition game has a unique symmetric equilibrium which depends on initial public beliefs we determine the impact of changes in the cost and signal distributions on investment timing and how equilibrium is affected when a first mover advantage is introduced

repeated games and the reciprocal dumping model of trade abstract a repeated game version of the basic brander and krugman 1983 model is analyzed in the brander krugman model rivalry among oligopolistic firms gives rise to international trade it is now shown that no trade which is welfare reducing when transportation costs are negligible is a strong nash equilibrium of the supergame the threat strategies that support no trade the discount rate and the crucial role of transportation costs are discussed extending the branderkrugman analysis in a natural way

business as usual market crashes and wisdom after the fact the authors present a three stage model of market dynamics in the first stage routine behavior tends to keep information of common interest trapped in private hands in the second stage private information reaches a threshold that triggers some agents to alter their behavior these actions release information to the market the final stage involves the market s response to this news as other participants react to the initial departure from routine behavior the authors present an application to industry investment they also outline applications to the international debt crisis to bank runs and to political upheavals copyright 1994 by american economic association

rational frenzies and crashes most markets clear through a sequence of sales rather than through a walrasian auctioneer because buyers can decide whether to buy now or later rather than only now or never their current willingness to pay is much more sensitive to price than the demand curve is a consequence is that markets will be extremely sensitive to new information leading to both frenzies in which demand feeds on itself and crashes in which price drops discontinuously the paper also shows how a result from static auction theory the revenue equivalence theorem can be applied to solve for a dynamic price path

learning and information aggregation in an exit game we analyze information aggregation in a stopping game with uncertain common payos players learn from their own private experiences as well as by observing the actions of other players we give a full characterization of the symmetric mixed strategy equilibrium and show that information aggregates in randomly occurring exit waves observational learning induces the players to stay in the game longer the equilibria display aggregate randomness even for large numbers of players

information revelation and strategic delay in a model of investment we model investment as an n player game with a pure informational externality each player s payoff depends only on his own action and the state of nature however because a player s action reveals his private information players wait to see what other players will do equilibrium is inefficient because delay is costly and information is imperfectly revealed we characterize the unique symmetric perfect bayesian equilibrium and study the robustness of delay which turns out to be sensitive to the reaction speed and the number of players we establish the following results i when the period length is very short the game ends very quickly and there is a form of herding or informational cascade which results in a collapse of investment ii as the period length increases the possibility of herding disappears iii as the number of players increases the rate of investment and the information flow are eventually independent of the number of players adding more players simply increases the number who delay iv in the limit the time profile of investment is extreme a period of low investment followed either by an investment surge or a collapse

preemption and rent equalization in the adoption of new technology we study the adoption of a new technology to illustrate the effects of preemption in games of timing we show that the threat of preemption equalizes rents in a duopoly but that this result does not extend to the general oligopoly game if the gain to preemption is sufficiently small then the optimal symmetric outcome which involves late adoption is an equilibrium this contrasts with reinganum s result that in precommitment equilibria there must be diffusion we develop a new and richer formalism for modeling games of timing which permits a continuoustime representation of the limit of discrete time mixed strategy equilibria

revenue management without commitment dynamic pricing and periodic flash sales a seller has a fixed number of goods to sell by a deadline at each time he posts a regular price and decides whether to hold a flash sale over time buyers privately enter the market and strategically time their purchases if a buyer does not purchase when she arrives she can pay an attention cost to recheck the regular price afterwards or she can wait for future flash sales where she may obtain a good at a discounted price in the unique markov perfect equilibrium the seller sporadically holds flash sales to lower the stock of goods a flash sale increases the willingness to pay of future buyers but decreases the willingness to pay of buyers who arrive early in the game when it is very likely that a buyer will obtain a good in a flash sale the seller holds a big initial flash sale for all but one unit of the good

delay and information aggregation in stopping games with private information abstract we consider equilibrium timing decisions in a model with a large number of players and informational externalities the players have private information about a common payoff parameter that determines the optimal time to invest they learn from each other in real time by observing past investment decisions we develop new methods of analysis for such large games and we give a full characterization of symmetric equilibria we show that the equilibrium statistical inferences are based on an exponential learning model although the beliefs converge to truth learning takes place too late ex ante welfare is strictly between that without observational learning and that with full information

competitive experimentation with private information the survivor s curse we study a winner take all r d race between two firms that are privately informed about the arrival rate of an invention over time each firm only observes whether the opponent left the race or not the equilibrium displays a strong herding effect that we call a survivor s curse unlike in the case of symmetric information the two firms may quit the race nearly simultaneously even when their costs and benefits for research differ significantly