Finance Seminar（2013-17）

Topic:Optimal Equity Auctions When Bidders Are Ex-Ante Heterogeneous

Speaker:LIU Tingjun, Cheung Kong Graduate School of Business

Time:Thursday, 17 October, 10:00-11:30

Location:Room 217, Guanghua Building 2

Abstract：I analyze the effects of heterogeneous bidders who differ in sizes and distributions of synergy gains in equity auctions. Such heterogeneity affects the ordering of equity bids, rendering the seller’s revenues sensitive to the auction design. Among all incentive-compatible mechanisms, I identify the optimal mechanism that maximizes the seller’s expected revenues. I show how bidder heterogeneity alters the optimal auction design, and obtain the distinct implications of different sources of bidder heterogeneity. I provide intuitive characterizations of the optimal mechanism’s properties; I also show the optimal mechanism has features with implications that go beyond the direct first-order intuition.

Your participation is warmly welcomed!