Page "Winner's curse" Paragraph 0
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Wikipedia
The winner's curse is a phenomenon akin to a Pyrrhic victory that occurs in common value auctions with incomplete information.
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.
However, an actual overpayment will generally occur only if the winner fails to account for the winner's curse when bidding ( an outcome that, according to the revenue equivalence theorem, need never occur ).
So despite its dire-sounding name, the winner's curse does not necessarily have ill effects in practice.
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