Auctioned off to the highest bidder

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In Sweden, firms that fail to meet their debt obligations are immediately auctioned off to the highest bidder. (There is no reorganization through Chapter 11 bankruptcy.) The current managers are often the high bidders for the company. (Hint: Assume these auctions are common-value auctions.)

Suppose for a particular auction, the current managers have placed a bid of $11 million.

True or False: Bidding significantly higher than $11 million will likely result in you suffering from the winner's curse?

Reference no: EM133064138

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