An auction with a buyout option is modelled. Such an option allows a bidder to purchase the item being auctioned at a pre-specified buyout price, instead of attempting to obtain the item through the traditional auction procedure. This analysis is motivated by internet auctions where such options are present. If all auction participants are risk neutral, the seller will choose a buyout price high enough so that the option is never exercised. However, a risk averse seller facing risk neutral bidders will choose a price low enough so that the option is exercised with positive probability. Further, if bidders are risk neutral and the seller is risk averse, this option may result in a Pareto improvement compared to a sealed bid second price auction. Copyright Springer-Verlag Berlin/Heidelberg 2006Auctions, Internet, Buyout option.,
One of the most significant challenges to enduring family businesses is the process of passing the leadership of a firm from one generation to another. This article introduces game theory as a model for examining succession as a set of rational but interdependent choices made by individuals about a firm’s leadership. Its primary contribution is demonstrating the application of game theory to understanding the decisions and outcomes of succession events.
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