A Theory of Indicative Bidding

  title={A Theory of Indicative Bidding},
  author={Daniel Quint and Kenneth Hendricks},
When selling a business by auction, sellers typically use indicative bids—nonbinding preliminary bids—to select a small number of bidders to conduct due diligence and submit binding offers. We show that if entry into the auction is costly, indicative bids can be informative: symmetric equilibrium exists in weakly increasing strategies, with bidders “pooling” over a finite number of bids. The equilibrium helps the seller select high value bidders with higher likelihood, although the highest… CONTINUE READING

Tables and Topics from this paper.

Explore Further: Topics Discussed in This Paper


Publications citing this paper.


Publications referenced by this paper.

Similar Papers

Loading similar papers…