Game Theoretical REIT Acquisitions

This study conceptualized and created the three-person cooperative game. To date, the existing cooperative game is the two-person cooperative game by [Nash, J (1953). Two-person cooperative games. Econometrica, 21(1), 128-140]. The three-person cooperative game leads to cross-subsidization. Therefore, in the context of real estate investment trust (REIT) acquisitions, friendly deals are more beneficial than hostile mergers. The latter finding is consistent with prior studies such as [Womack, KS (2012). Real estate mergers: Corporate control & shareholder wealth. The Journal of Real Estate Finance and Economics, 44(4), 446–471].