Abstract
This article generalizes the model of Dodonova and Khoroshilov (Citation2006) who argues that there are no signalling equilibria in takeover auctions.
Notes
1 This assumption is equivalent to the shill-bidding assumption (as in Chakraborty and Kosmopoulou, Citation2004) in standard English auctions where the seller can bid on his own object as a bidder with the exception that in the takeover contest the identity of the seller is observable to everybody.
2 A linear value function v i = αs i + (1 − α)s j used by Dodonova and Khoroshilov (Citation2006) is a special case of the value function used in this model.
3 Here we use inf instead of min because we do not require D 1 and D 2 to be closed sets.
4 That is, conditional profit given that the first bidder wins the auction and all the information revealed by the time the auction has ended but before the signal of the second bidder is revealed.