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Just For Fun: The Winner’s Curse Revisited, Dilbert Style…

April 27th, 2010 · 2 Comments
Behavioral Econ · Just For Fun

When I wrote last week about the winner’s curse, I actually learned something new when reading over the Wikipedia page on the subject. According to the interwebs:

The winner’s curse is a phenomenon akin to a Pyrrhic victory that occurs in common value auctions with incomplete information. In short, the winner’s curse says that in such an auction, the winner will tend to overpay. The winner may overpay or be ‘cursed’ in one of two ways: 1) the winning bid exceeds the value of the auctioned asset such that the winner is worse off in absolute terms; or 2) the value of the asset is less than the bidder anticipated, so the bidder may still have a net gain but will be worse off than anticipated.

I was somewhat unaware that there was an actual distinction made between those two definitions. As such, I am not quite sure which definition the following scenario falls under:

I’ll just go with whichever one has more to do with incomplete information.

Tags: Behavioral Econ · Just For Fun

2 responses so far ↓

  • 1 cigar box guitar lady // Jul 31, 2011 at 10:38 pm

    An impressive share. I just gave this one to a colleague who was doing a little analysis on this. And he just bought me breakfast because I found it for him.. smile. So let me reword that: Thnx for the treat! But yeah Thnkx for spending the time discussing this, I feel strongly about it and love reading more on this topic. If possible, as you become more expert, would you mind updating your blog with more details? It is highly helpful for me. Big thumbs up for this blog post!

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