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Securities Auctions under Moral Hazard : An Experimental Study 1
| Content Provider | Semantic Scholar |
|---|---|
| Author | Tepper, S. |
| Copyright Year | 2008 |
| Abstract | In many settings, including venture capital nancing, mergers and acquisitions, and lease competition, the structure of the contracts (debt versus equity) over which rms compete di¤ers. Furthermore, the structure of the contract a¤ects the future incentives of the rm to engage in value-creating activities by potentially diluting e¤ort or investment incentives. We study, both theoretically and in the lab, the performance of debt and equity auctions in the presence of both private information and hidden e¤ort. We show that the revenues to sellers in debt and equity auctions differ systematically depending on the returns to entrepreneurial e¤ort. We then test these revenue rankings and other predictions of the theory using controlled laboratory experiments where we vary the returns to e¤ort. While the bidding behavior, particularly in equity auctions, di¤ers from the dominant strategy prediction of the theory, the predicted revenue rankings are borne out in the lab. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://faculty.haas.berkeley.edu/rjmorgan/Securities%20auctions.pdf |
| Language | English |
| Access Restriction | Open |
| Subject Keyword | ARID1A wt Allele Abstract Summary Contract agreement Dilution of precision (navigation) Ephrin Type-B Receptor 1, human Equity crowdfunding Estimated Experiment Kaplan–Meier estimator Linkage (software) MALL gene Moral hazard Personally identifiable information Real-time bidding Sorting algorithm Transaction counts and value totals - contract VC dimension Vital capacity Volatility genetic linkage |
| Content Type | Text |
| Resource Type | Article |
