Question: Two rival PE firms are interested in finding the same two start- ups. Each would prefer not to get into a bidding war with the

Two rival PE firms are interested in finding the same two start- ups. Each would prefer not to get into a bidding war with the other regarding either of the start-ups. Payoffs are given in the following table:

What are the reservation prices of managers at the two firms? What will bidding look like?

PE Firm A Invest Start-up 1 Invest Start-up 2 Invest 1 10, 10 60, 40 PE Firm B Invest 2 25, 55 20, 20

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