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Code Creation in Endogenous Merger Experiments

Feiler, Lauren and Camerer, Colin F. (2010) Code Creation in Endogenous Merger Experiments. Economic Inquiry, 48 (2). pp. 337-352. ISSN 0095-2583. doi:10.1111/j.1465-7295.2009.00200.x.

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We study the conflict that can occur in a merger due to firms’ use of specialized language, or “code,” and whether participants accurately forecast this difficulty. After creating a shared code to describe different pictures accurately, subjects bid for extra payments to join a merged group. The two lowest bidders are placed in the merged group. Values inferred from two different bidding procedures indicate fairly accurate general appraisals of the cost of the merger, but the values of those subjects who bid the least, and choose to join the merged group, are too optimistic, reflecting an “organizational winner’s curse.”

Item Type:Article
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Camerer, Colin F.0000-0003-4049-1871
Additional Information:© 2009 Western Economic Association International. Article first published online: 16 Oct. 2009. This research was supported by an NSF and Betty and Gordon Moore Foundation grant to Colin Camerer. We are grateful to Galen Loram, Ming Hsu, Joseph Wang, and programmers Charlie Hornberger and John Lin for going beyond the call of duty to make sure this project worked. We also benefited from helpful discussions with Preston McAfee, Simon Wilkie, Jacob Goeree, and Paul Healy, two anonymous referees, and comments from audiences at Caltech, Chicago GSB, ESA, and the Behavioral Organizational Economics meeting at MIT.
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Gordon and Betty Moore FoundationUNSPECIFIED
Issue or Number:2
Record Number:CaltechAUTHORS:20110204-074155951
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Official Citation:FEILER, L. and CAMERER, C. F. (2010), CODE CREATION IN ENDOGENOUS MERGER EXPERIMENTS. Economic Inquiry, 48: 337–352. doi: 10.1111/j.1465-7295.2009.00200.x
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:21997
Deposited By: Tony Diaz
Deposited On:23 Jun 2011 19:12
Last Modified:09 Nov 2021 16:02

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