In:
Management Science, Institute for Operations Research and the Management Sciences (INFORMS), Vol. 66, No. 9 ( 2020-09), p. 3956-3976
Kurzfassung:
This paper endogenizes auction timing and initiation in auctions of real options. Because bidders have information rent, a seller faces a “virtual strike price” higher than the actual exercise cost. The seller inefficiently delays the auction to encourage bidder participation and uses the irreversible nature of time to gain partial control over option exercises. The seller’s private benefit at option exercise may restore efficient auction timing, but option exercises are always inefficiently late. When the seller lacks commitment to auction timing, bidders always initiate in equilibrium, resulting in earlier option exercise and higher welfare than auctions proscribing bidder initiation. Overall, auction timing modifies the distribution of the bidder valuations and has important implications for bidding strategies, auction design, and real outcomes. This paper was accepted by Gustavo Manso, finance.
Materialart:
Online-Ressource
ISSN:
0025-1909
,
1526-5501
DOI:
10.1287/mnsc.2019.3374
Sprache:
Englisch
Verlag:
Institute for Operations Research and the Management Sciences (INFORMS)
Publikationsdatum:
2020
ZDB Id:
206345-1
ZDB Id:
2023019-9
SSG:
3,2
