The Winner’s Curse and Public Information in Common Value Auctions

Kagel, J. H., & Levin, D. (1986). The Winner’s Curse and Public Information in Common Value Auctions. American Economic Review, 76(5), 894-920.

Type

Journal article

Intellectual base

Primary research

Year

1986

Volume

76

Issue

5

Pages

894-920

Link

https://www.jstor.org/stable/1816459

Cited from

information_theory

Cited by

3 citations across 3 artifacts.

Each citation links to the sentence it supports in the citing article.

Primes

• Regret
  • Auction and market design: Bidders shade bids to avoid the regret of the winner's curse (paying more than the object's value) or the regret of leaving surplus on the table (bidding too little and losing a profitable object); mechanism designers engineer formats — sealed-bid versus ascending, for instance — partly to manage the regret exposure participants anticipate.
• Winner's Curse
  • This counterintuitive scaling — that more competition makes winning worse news, not better — is one of the cleanest diagnostic markers that a situation instantiates the winner's curse rather than some other selection effect.

Mechanisms

• Post-Auction Loss Review
  • Calibration requires realized feedback

    This sourceShows that calibration in repeated common-value auctions depends on realized outcome feedback.

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