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Finance seminar presented by Andrey Malenko (Boston College)

09 October 2019, 4:00 pm–6:00 pm

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Auctions with Endogenous Initiation

Event Information

Open to

All

Organiser

Ji Hee Yoon

We study strategic initiation of auctions by potential buyers and the seller. This problem arises in auctions of companies and asset sales, among other contexts. A bidder's decision to approach the seller signals that this bidder is optimistic about the value of the asset. In common-value auctions, such as battles between nancial bidders, this revelation eect disincentivizes bidders from approaching the seller. In pure common-value auctions, no bidder ever approaches and auctions are seller-initiated. By contrast, in private-value auctions, such as battles between strategic bidders, the effect is the opposite, and equilibria can feature both seller- and bidder-initiated auctions.
The model generates testable implications about the link between the initiating party, bids, and sale outcomes. It also points to a role of shareholder activists and investment banks as intermediaries in auctions of companies.

Paper can be found

About the Speaker

Ralph Koijen

at Chicago Booth