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Number of Bidders and the Winner’s Curse

Author

Listed:
  • Peeters Ronald

    (Department of Economics, University of Otago, Dunedin, New Zealand)

  • Tenev Anastas P.

    (Department of Economics, Maastricht University, Maastricht, Netherlands)

Abstract

Within an affiliated value auction setting, we study the relationship between the number of bidders and the winner’s curse in terms of its frequency of occurrence and its expected harm. From a design perspective, we find that both the number of bidders and the level of affiliation are instrumental when choosing an auction format and whether to encourage or discourage bidder participation.

Suggested Citation

  • Peeters Ronald & Tenev Anastas P., 2018. "Number of Bidders and the Winner’s Curse," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 18(3), pages 1-4, July.
    • Handle: RePEc:bpj:bejeap:v:18:y:2018:i:3:p:4:n:9
    DOI: 10.1515/bejeap-2018-0025
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    References listed on IDEAS

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    1. Kagel, John H, et al, 1989. "First-Price Common Value Auctions: Bidder Behavior and the "Winner's Curse."," Economic Inquiry, Western Economic Association International, vol. 27(2), pages 241-258, April.
    2. Dyer, Douglas & Kagel, John H & Levin, Dan, 1989. "A Comparison of Naive and Experienced Bidders in Common Value Offer Auctions: A Laboratory Analysis," Economic Journal, Royal Economic Society, vol. 99(394), pages 108-115, March.
    3. Thaler, Richard H, 1988. "Anomalies: The Winner's Curse," Journal of Economic Perspectives, American Economic Association, vol. 2(1), pages 191-202, Winter.
    4. Paul Klemperer, 1999. "Auction Theory: A Guide to the Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 13(3), pages 227-286, July.
    5. Kagel, John H. & Levin, Dan, 1986. "The Winner's Curse and Public Information in Common Value Auctions," American Economic Review, American Economic Association, vol. 76(5), pages 894-920, December.
    6. Garvin, Susan & Kagel, John H., 1994. "Learning in common value auctions: Some initial observations," Journal of Economic Behavior & Organization, Elsevier, vol. 25(3), pages 351-372, December.
    7. Klemperer, Paul, 1999. " Auction Theory: A Guide to the Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 13(3), pages 227-86, July.
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    Cited by:

    1. Endre J. Reite & Joakim Blix Prestmo, 2023. "Platform Perils: The winner's curse on B2C consumer lending platforms," Economics Bulletin, AccessEcon, vol. 43(1), pages 500-509.

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    More about this item

    Keywords

    winner’s curse; number of bidders; affiliated value auctions;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement

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