Asked by Journeyy Williams on Sep 24, 2024
Verified
This factor contributes to the winner's curse
A) your estimate of the value of the object was not the most optimistic
B) your bid was the highest
C) there were not many other bidders you had to beat out
D) you shaded your bid too much
Winner's Curse
The tendency of auction winners to have paid more than the item's actual value, often due to competitive bidding and overestimation of worth.
Bid Shading
A strategy in auctions where bidders intentionally bid lower than their actual value to increase the chance of winning at a lower price.
- Pinpoint contributors to the winner's curse in auction scenarios and methods to lessen its impact.
Verified Answer
TD
Tabatha Delgado5 days ago
Final Answer :
B
Explanation :
The winner's curse occurs when the winner of an auction pays more for the item than it's actually worth. This happens when the winning bid is higher than other bidders' valuations, and the winner overestimates the item's value. Therefore, choice B, where the bid was the highest, is the factor that contributes to the winner's curse.
Learning Objectives
- Pinpoint contributors to the winner's curse in auction scenarios and methods to lessen its impact.