The winner's curse is a phenomenon that can occur in common value auctions, where every bidder places roughly the same true value on an item but each receives a different private estimate of that value. The winning bidder is typically the one with the most optimistic estimate, and because winning itself is a signal that other bidders valued the item lower, the winner tends to have overestimated the item's worth and to have paid more for it than it is actually worth.
Facts
Core Claima phenomenon that may occur in common value auctions, where all bidders have the same value for an item but receive different private signals about this value 1 First Described Year Classification
Type of Phenomenon Sources
1. Winner's curse - Wikipedia
Intro, sentence 1
a phenomenon that may occur in common value auctions, where all bidders have the same value for an item but receive different private signals about this value
History section
first addressed in 1971 by three Atlantic Richfield petroleum engineers
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