scholarly journals Hypothetical Thinking and the Winner's Curse: An Experimental Investigation

2017 ◽  
Author(s):  
Johannes Moser
Keyword(s):  
Experimental Investigation ◽  
Winner's Curse ◽  
Winner’S Curse

scholarly journals Separating Bayesian Updating from Non-Probabilistic Reasoning: An Experimental Investigation

2016 ◽  
Vol 8 (2) ◽  
pp. 39-60 ◽  
Author(s):  
Dan Levin ◽  
James Peck ◽  
Asen Ivanov
Keyword(s):  
Experimental Investigation ◽  
Probabilistic Reasoning ◽  
Bayesian Updating ◽  
Winner's Curse ◽  
Winner’S Curse ◽  
Common Value ◽  
Dutch Auction ◽  
Price Auction ◽  
Reasoning Skills ◽  
Decision Tasks

Through a series of decision tasks involving colored cards, we provide separate measures of Bayesian updating and non-probabilistic reasoning skills. We apply these measures to (and are the first to study) a common-value Dutch auction. This format is more salient than the strategically equivalent first-price auction and silent Dutch formats in hinting that one should condition one's estimate of the value on having the highest bid. Both Bayesian updating skills and non-probabilistic reasoning skills are shown to help subjects correct for the winner's curse, as does the saliency of the active-clock Dutch format. (JEL D12, D44, D83)

The Value of Victory - Neural Mechanisms of the Winner's Curse

2011 ◽  
Author(s):  
Wouter van den Bos ◽  
Arjun Talwar ◽  
Samuel McClure
Keyword(s):  
Neural Mechanisms ◽  
Winner's Curse ◽  
Winner’S Curse

The Real Winner's Curse

2017 ◽  
Author(s):  
Leopoldo Fergusson ◽  
Pablo Querubin ◽  
Nelson A. Ruiz ◽  
Juan F. Vargas
Keyword(s):  
Winner's Curse ◽  
The Real ◽  
Winner’S Curse

scholarly journals An Efficient Ascending-Bid Auction for Multiple Objects

2004 ◽  
Vol 94 (5) ◽  
pp. 1452-1475 ◽  
Author(s):  
Lawrence M Ausubel
Keyword(s):  
Privacy Preservation ◽  
Winner's Curse ◽  
Multiple Objects ◽  
Vickrey Auction ◽  
Treasury Bills ◽  
Winner’S Curse ◽  
Sealed Bid ◽  
Interdependent Values ◽  
Private Values ◽  
Current Price

When bidders exhibit multi-unit demands, standard auction methods generally yield inefficient outcomes. This article proposes a new ascending-bid auction for homogeneous goods, such as Treasury bills or telecommunications spectrum. The auctioneer announces a price and bidders respond with quantities. Items are awarded at the current price whenever they are “clinched,” and the price is incremented until the market clears. With private values, this (dynamic) auction yields the same outcome as the (sealed-bid) Vickrey auction, but has advantages of simplicity and privacy preservation. With interdependent values, this auction may retain efficiency, whereas the Vickrey auction suffers from a generalized Winner's Curse.

Anomalies: The Winner's Curse

1988 ◽  
Vol 2 (1) ◽  
pp. 191-202 ◽  
Author(s):  
Richard H Thaler
Keyword(s):  
Field Studies ◽  
Risk Averse ◽  
Common Phenomenon ◽  
Winner's Curse ◽  
Winner’S Curse ◽  
Empirical Question ◽  
Common Value ◽  
Winning Bidder ◽  
Common Value Auction ◽  
Very High

Next time that you find yourself a little short of cash for lunch, try the following experiment in your class. Take a jar and fill it with coins, noting the total value of the coins. Now auction off the jar to your class (offering to pay the winning bidder in bills to control for penny aversion). Chances are very high that the following results will be obtained: (1) the average bid will be significantly less than the value of the coins (bidders are risk averse); (2) the winning bid will exceed the value of the jar. Therefore, you will have money for lunch, and your students will have learned first-hand about the “winner's curse.” The winner's curse cannot occur if all the bidders are rational, so evidence of a winner's curse in market settings would constitute an anomaly. However, acting rationally in a common value auction can be difficult. Solving for the optimal bid is not trivial. Thus, it is an empirical question whether bidders in various contexts get it right or are cursed. I will present some evidence, both from experimental and field studies, suggesting that the winner's curse may be a common phenomenon.

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