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| Author: | Goeree, J.K. Offerman, T. |
| Title: | Winner's curse without overbidding |
| Journal: | European Economic Review
2003 : AUG, VOL. 47:4, p. 625-644 |
| Index terms: | Auctions Bidding |
| Language: | eng |
| Abstract: | This paper reports the results of a series of second-price auction experiments where each bidder's signal is given by a normally distributed value plus a normally distributed error. While bidders' values differ in one treatment they are the same in another, which allows for a direct test of the "winner's curse" irrespective of confounding factors. Bidders may also fall prey to a "news curse" when they do not sufficiently take into account that signals and errors are correlated. It is found that the effects of the winner's curse are mitigated by a news curse and loss or risk aversion. |
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