Pedro Arantesrose
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Winner's Curse

The winner's curse is a tendency in which the winner of a bid in an auction pays more than the item's intrinsic value or true worth.
#atlantic-richfield
Zettelkasten, August 22, 2021 (changes)

Notes

  • The winner's curse is a tendency in which the winner of a bid in an auction pays more than the item's intrinsic value or true worth.

    • The winner makes the enormous overestimation of an item, thus winning the auction.
  • Incomplete information, emotions, and other factors may cause the difference between the paid and intrinsic values.

  • Three Atlantic Richfield engineers coined the term winner's course after observing poor investment returns of companies bidding for offshore oil drilling rights in the Gulf of Mexico.

References

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