تطبیق حراج با نفرین برنده و بازارهای مالی ناقص

This paper explains how and why the Matching Auctions work better with Imperfect Financial Markets. We show that an efficient outsider can obtain a “good” project even if the insider has informational advantage.

It is common practice that local and state governments prefer to give local businesses advantage over outsiders with the intention to ensure the best service and support the local economy. Procedures like Matching Auctions or a right of first refusal are common. 1 However, local businesses are better informed about local projects which creates asymmetry between insiders and outsiders. The consequence is that the outsiders are tamer in bidding, if at all, knowing that they will get business from the locals if they bid too high and will suffer from the Winner’s Curse. 2 If they bid less than the project can promise, then the locals will match such a bid. Interestingly, the current difficult financial times can actually help efficient outsiders to obtain local businesses from inefficient local companies. In this paper, we present a simple model which shows that the effect of Imperfect Financial Markets–when local companies have problems obtaining enough funds to match an outsider’s bid–can outweigh the Winner’s Curse effect. There are three main factors in the model. First, the probability that the project is “good” has to be high enough. Since both the outsider and the insider have asymmetric information, in order to make a bid the outsider has to be confident enough that the project is “good.” Then, the cost of making a bid has to be low enough. If the cost is very high, the project may not compensate for it. Finally, financial markets have to be imperfect. This means that for one reason or another the insider sometimes cannot afford matching the outsider’s bid even if he wants to. If financial markets are perfect, the outsider gets only “bad” projects (adverse selection), and therefore does not make a bid because of the Winner’s Curse. One of the applications of the model is in takeovers, in which one of the bidders knows the value of the object and the other bidders do not.3 The well-known result is that the outcomes of standard auctions are highly sensitive to small asymmetries between bidders in (almost) common value settings. Many examples show that the bidder who knows the value gets an object at a low price because of the Winner’s Curse (see Glaxo’s takeover bid for the Wellcome Drugs company in Klemperer (1998, p. 763) and Huizenga matched bid for the Miami Dolphins football team in Nalebuff and Brandenburger (1996, pp. 174–175), among others). The crucial assumption is that the financial markets are perfect. However, if a bidder knows the value but cannot borrow money for matching the current bid, the outcome of such an auction may be quite different from the prediction of the theory based on the assumption that financial markets are perfect.