UNCONDITIONAL AND CONDITIONAL TAKEOVER OFFERS - EXPERIMENTAL-EVIDENCE

This article compares the predictions of finite shareholder models of conditional and unconditional takeover offers with the outcomes of lab oratory experiments. In addition to differentiating between types of o ffers, the experimental designs span small and large firms as well as different levels of offer premiums. It is found that in unconditional offers to large groups of subjects (28-40), the symmetric Nash equilib rium predicts observed tendering frequencies quite accurately. For oth er experimental designs, the results are mixed The analysis of shareho lder tendering strategies from the experiment yields insights into (i) the effects of takeover offer designs, (ii) the appropriateness of fi nite-shareholder models for research and (iii) the costs of free ridin g when shareholders are nonatomistic.