Definition for : Winners' curse

Winners' curse is when the winner of a sale by Auction ends up paying more than the item was worth. It is assumed that some buyers will underestimate and others overestimate the Value of the item up for Auction, and accordingly, the winner will be one of those who have overestimated the Value and thus has paid too much.

(See Chapter 26 Value and corporate finance of the Vernimmen)

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