Because common value auction participants estimate the value with error, the bidder who most overestimates the value of a lease will be the highest (winning) bidder. This is sometimes referred to as the [...], and the winning bidder may have losses as a result.
Because common value auction participants estimate the value with error, the bidder who most overestimates the value of a lease will be the highest (winning) bidder. This is sometimes referred to as the [...], and the winning bidder may have losses as a result.
Because common value auction participants estimate the value with error, the bidder who most overestimates the value of a lease will be the highest (winning) bidder. This is sometimes referred to as the [...], and the winning bidder may have losses as a result.
Answer
winner's curse
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Open it Because common value auction participants estimate the value with error, the bidder who most overestimates the value of a lease will be the highest (winning) bidder. This is sometimes referred to as the winner's curse, and the winning bidder may have losses as a result.
Original toplevel document (pdf)
owner: iamcfa - (no access) - 2015 CFA Level 1 Study Schweser Book 2 - Economics, p18
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