Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments December 24, 2010 erstellt
Beschreibung:
This article explores the effect of a subset of symmetric bidders joining to bid together. Possible applications include mergers, collusion and legal joint-bidding arrangements. The change produces a "strong" party with a more advantageous value distribution than the remaining "weak" bidder(s). The predicted effects include inefficiency, a decrease in the seller's revenue, and higher bidders' payoffs. When the bidders are risk neutral, the members of the strong party are expected to benefit less than the weak bidders. The prediction is reversed when the bidders are sufficiently risk averse. These hypotheses are tested experimentally. The Nash equilibrium with risk aversion is consistent with some features of the data. Contrary to the theory, joint-bidding increases efficiency and the seller's revenue decreases by less than expected. Strong bidders benefit more than weak bidders indicating that the incentives to bid jointly may be greater than hypothesized. Additionally, the experiment assesses the effect of group decision making. A Nash equilibrium prediction for individual-group differences based on differences in risk attitudes is not supported by the data