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| Author: | Lederer, P. |
| Title: | Predicting the winner's curse |
| Journal: | Decision Sciences
1994 : JAN-FEB, VOL. 25:1, p. 79-101 |
| Index terms: | DECISION ANALYSIS STATISTICAL METHODS BIDDING |
| Language: | eng |
| Abstract: | If quantity uncertainty exists in a first price auction that specifies a fixed bid, a participant must answer two questions when evaluating a candidate bid. "What are my chances of winning?" and "What is the effect of the winner's curse on my quantity estimate?" The winner's curse is the tendency of the winner of a first-price sealed-bid auction to be the bidder that most overvalues the items being offered. This paper presents an empirical method to answer the above questions by estimating a predictive distribution of the highest competing bid and the quality bias caused by the winner's curse. |
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