Winner's curse is likely to happen in which of the following auctions?

Question

Quizplus · Accepted Answer

Winner's curse is more likely to happen in auctions where the value of the item being auctioned is uncertain and where bidders have varying information about its value. In the case of unexplored oil reserves, for example, the winning bidder may overestimate the potential value and end up paying more than the reserves are worth, leading to a winner's curse. In contrast, corn stored in a warehouse or iron ore is more easily measurable and therefore may not lead to winner's curse as often. US Treasury bonds are also less likely to lead to winner's curse because their value is well-known and bidders have access to the same information.

Winner's Curse Is Likely to Happen in Which of the Following