Asked by Khariah Hunter on Sep 24, 2024
Verified
This factor contributes to the winner's curse
A) your estimate of the value of the object was the most optimistic
B) your bid was not the highest
C) there were not many other bidders you had to beat out
D) you shaded your bid too much
Winner's Curse
A phenomenon in auctions where the winning bidder overpays due to overestimation of the item's value.
Optimistic Estimate
An estimate that assumes the most favorable conditions and outcomes for a project or investment.
Bid Shading
A strategy in which buyers deliberately bid lower than their actual valuation of the item to save costs, common in auction contexts.
- Identify the reasons behind the winner's curse in auctions and the approaches to diminish its effects.
Verified Answer
PS
Peach Slushey4 days ago
Final Answer :
A
Explanation :
If you overestimate the value of the object, you are more likely to win the auction by bidding too high. This results in the winner's curse, where you end up paying more than the item is worth.
Learning Objectives
- Identify the reasons behind the winner's curse in auctions and the approaches to diminish its effects.