Talk:Winner's curse

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[edit] Savvy bidders?

Is that the correct term to use? -LeinaD natipaC 12:59, 15 August 2006 (UTC)

  • If there's a technical term, I don't know it. The point is that a bidder who understands bidding strategy will adjust for the winner's curse when setting their bid. "Savvy" gets the idea across, I think. Isomorphic 06:43, 23 September 2006 (UTC)

[edit] Google IPO

It's worth noting that in the Google IPO, the Winner's curse did not strike--instead the stock doubled within a quarter. I think the model of human behaviour is overly simplistic--which is probably just as well, or no-one would ever buy anything at auction at all! -- anon in August 2005

  1. there was not only one good.
  2. all bidders underestimated (the stock price at the next possible sale moment)
Tobias Conradi (Talk) 16:58, 18 November 2005 (UTC)

[edit] Seen vs. Unseen

I agree that this is a simplistic concept. But this just means that sometimes there will be realities that make the concept inapplicable. It is still useful when additional complexities don't apply to a significant degree...and applicability is always by degrees.

For example. The "Winner's curse" concept focuses on multiple bidders on a single auction item. What if, as is often the case, there is not just one item for auction, but many identical ones for auction? Instead of a winner's curse scenario, what develops are standard supply and demand market equilibria. And remember, the winner's curse is referring to an overpayment relative to market price, not labor cost. Further, every good can be measured in opportunity costs of possibly very different goods. We can therefore state that the winner's curse of auctions is applicable to the degree that multiple bidders consider the particular auction better than the perceived cost of their next best opportunity. Also, good examples of winner's curse involve goods or services intended to be used as capital, expecting a measurable return on investment (ROI), where realized return on investment would be compared to actual ROI where the effect of winner's curse could be measured. If it could apply to objects like celebrity memorabilia, it would be difficult to measure any financial loss created by overpaying for the good.

Unless I get further comments, I may eventually add a version of the above paragraph to the article. Carltonh 20:25, 24 October 2005 (UTC)

[edit] Battle of attrition?

Maybe I'm exposing my own ignorance here, but how are winner's curse and battle of attrition related? I mean, I guess they both deal with situations that could be described according to game theory, but is there a better connection I'm not seeing? - JustinWick 21:46, 21 September 2006 (UTC)

Ah, it was War of attrition (game), I disambiguated. - JustinWick 09:21, 7 December 2006 (UTC)

[edit] balancing effect

It appears to me that if the resulting prices in auctions were systematically too high, not many people would be interested in buying, but there would be a huge amount of sellers. Thinking about this in terms of demand and supply, would this not drive prices down so that the winner's curse effect is cancelled? Kokkokanta 17:04, 13 January 2007 (UTC)