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The winner's curse: why is the cost of sports mega-events so often underestimated?

  • Wladimir Andreff

    ()

    (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)

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    Auction theory, when the bidders do not know the value of what is auctionned, is used to explain how the Olympic Games are allocated to competing bidding cities. It is a centralized allocation process with asymmetric information which usually comes out with a winner's curse. Various indicators of the latter are proposed and exemplified, the major one being the systematic ex ante underestimation of the Olympics costs.

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    File URL: http://halshs.archives-ouvertes.fr/docs/00/70/34/66/PDF/Definitely_4_Andreff_in_Maennig-Zimbalist_final_clean_copy_last_revision_August.pdf
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    Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00703466.

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    Date of creation: 2012
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    Publication status: Published, International Handbook on the Economics of Mega Sporting Events, Edward Elgar (Ed.), 2012, 37-69
    Handle: RePEc:hal:cesptp:halshs-00703466
    Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00703466
    Contact details of provider: Web page: http://hal.archives-ouvertes.fr/

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    8. Giliberto, S Michael & Varaiya, Nikhil P, 1989. " The Winner's Curse and Bidder Competition in Acquisitions: Evidence from Failed Bank Auctions," Journal of Finance, American Finance Association, vol. 44(1), pages 59-75, March.
    9. Wolfgang Maennig, 2002. "On the Economics of Doping and Corruption in International Sports," Journal of Sports Economics, , vol. 3(1), pages 61-89, February.
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    11. Levis, Mario, 1990. "The Winner's Curse Problem, Interest Costs and the Underpricing of Initial Public Offerings," Economic Journal, Royal Economic Society, vol. 100(399), pages 76-89, March.
    12. Swantje Allmers & Wolfgang Maennig, 2008. "South Africa 2010: Economic Scope and Limits," Working Papers 021, Chair for Economic Policy, University of Hamburg.
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