How do participants in an auction respond to the problem of the "winner's curse"?
A)They bid more aggressively to win the auction and avoid the "curse".
B)They exit the auction because winning can only be a bad sign of the object's worth.
C)All bid less aggressively,so that the winner ends up not regretting having won.
D)The winner regrets having won the auction.

Question

Quizplus · Accepted Answer

Participants in an auction typically respond to the problem of the "winner's curse" by bidding less aggressively. The "winner's curse" refers to the tendency for the winner of an auction to overpay for the item, leading to regret later on. By bidding less aggressively, the participants hope to avoid this regret and minimize the risk of overpaying. Therefore, option C is the most appropriate choice.

How Do Participants in an Auction Respond to the Problem