The winner's curse refers to:
A)bidding an amount higher than your maximum willingness to pay in an effort to 'win' in a private values auction.
B)winning a private values auction and later determining that you bid more than you had really intended to.
C)winning a common values auction and bidding more than the object is worth.
D)winning an item in a common values auction that you don't really want.

Question

Quizplus · Accepted Answer

The winner's curse specifically refers to the phenomenon where the winner of an auction, particularly in the context of common values (where the item's value is the same for everyone but not known with certainty at the time of bidding), ends up paying more than the item's actual worth. This often happens because the winner tends to overestimate the item's value during the bidding process.

The Winner's Curse Refers To