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

#gulf-of-mexico

Zettelkasten, August 22nd, 2021.

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

Adam Hayes. Winner's Curse

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