Wu, Hong
(2015)
Essays in Experimental Economics and Corporate Finance.
Doctoral Dissertation, University of Pittsburgh.
(Unpublished)
Abstract
The first chapter experimentally examine repeated partnerships with imperfect monitoring, where participants can unilaterally sever partnerships at any time. The experiment examines effects from changes in the value of an outside-the-partnership option. We find four main results where partners have access to the same outside option: i) the presence of a dissolution option increases cooperation; ii) the use of dissolution is dictated by individual rationality; iii) where dissolution is used as a punishment, subjects increases lenience, but are still forgiving; iv) overall efficiency is non-monotone in the outside option. An extension examines asymmetric outside options finding: advantages to terminating first-movers creates highly inefficient outcomes; a last-mover advantage is less inefficient but reduces forgiveness; while an arbitrator-mechanism assigning higher payoffs to ``more-deserving'' parties increases efficiency.
The second chapter experimentally investigates the effects from adding a simple and intuitive stage before the start of a repeated partnership, where agents communicate about strategies they intend to play. Varying the bindingness of the message sent in the preplay communication, I examine the efficiency gain of adding these two communication institutions and behavior of senders and receivers in each of them. I find that adding both forms of preplay communication increases cooperation and efficiency in the ensuing repeated partnership. In particular, when the communication is binding, i.e. senders formulate specify strategies as contracts, the efficiency of the repeated partnership is highest. Moreover, I find that more cooperative and lenient strategies are sent and receivers are more cooperative in partnerships governed by contracts.
The third chapter analyzes the sales method for a sample of 575 M\&A deals announced between 1998 and 2012 and find that targets use auctions to increase the probability of finding bidders that can relax their financial constraints rather than to create operational synergies. Auctions, compared to negotiated deals, are associated with significantly higher target announcement returns, especially for relatively small targets. Bidder returns are positively related to auctions for bidders acquiring relatively small targets, not for the full sample. Taking into account size differences, we find that auctions, decrease target gains and increase bidder gains expressed in dollars.
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Details
| Item Type: |
University of Pittsburgh ETD
|
| Status: |
Unpublished |
| Creators/Authors: |
|
| ETD Committee: |
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| Date: |
23 June 2015 |
| Date Type: |
Publication |
| Defense Date: |
15 April 2015 |
| Approval Date: |
23 June 2015 |
| Submission Date: |
8 April 2015 |
| Access Restriction: |
2 year -- Restrict access to University of Pittsburgh for a period of 2 years. |
| Number of Pages: |
184 |
| Institution: |
University of Pittsburgh |
| Schools and Programs: |
Dietrich School of Arts and Sciences > Economics |
| Degree: |
PhD - Doctor of Philosophy |
| Thesis Type: |
Doctoral Dissertation |
| Refereed: |
Yes |
| Uncontrolled Keywords: |
Repeated Games, Endogenous Termination, Dissolution clauses, Imperfect public monitoring, Dynamic games, Sales Method; Mergers and Acquisitions; Auctions; Negotiations |
| Date Deposited: |
23 Jun 2015 18:00 |
| Last Modified: |
23 Jun 2017 05:15 |
| URI: |
http://d-scholarship.pitt.edu/id/eprint/24669 |
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