The winner's curse is the tendency in certain types of auctions for:
A) unsophisticated bidders to overpay whenever they win.
B) winners to be unable to win a subsequent auction.
C) winners to regret spending their money on the auctioned item.
D) the owner of the item up for auction to unfairly drive up auction prices.

Question

Quizplus · Accepted Answer

The winner's curse refers to the tendency of the highest bidder in an auction to overpay for the item being auctioned off, leading to a potential regret in the decision to bid and win. This tendency is often observed in auctions where bidders may have incomplete information about the value of the item, and inexperienced bidders may be more likely to fall into this trap.

The Winner's Curse Is the Tendency in Certain Types of Auctions