Asymmetric Information, If two firms considering a possible merger have unequal levels of

Asymmetric Information

If two firms considering a possible merger have unequal levels of knowledge regarding issues in their negotiations: (w) potential abuses of asymmetric information exist. (x) the payoff matrix is invariably asymmetric. (y) the more knowledgeable negotiator will gain by any merger and the firm along with less knowledge will lose. (z) gains by the transaction will be split within proportion to relative knowledge.

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