This factor contributes to the winner's curse
A)your estimate of the value of the object was not the most optimistic
B)your bid was not the highest
C)there were not many other bidders you had to beat out
D)you did not shade your bid enough

Question

​This factor contributes to the winner's curse
A)​your estimate of the value of the object was not the most optimistic
B)your bid was not the highest
C)there were not many other bidders you had to beat out
D)​you did not shade your bid enough

Quizplus · Accepted Answer

The winner's curse occurs when a bidder wins an auction but realizes that they paid too much compared to the true value of the item. This can happen if the bidder "shades" their bid too high in order to ensure they win the auction. This can occur if the bidder overestimates the value of the item, but shading the bid too high can also happen if there are many other bidders or if the bidder simply wants to ensure they win the auction. However, out of the given options, shading the bid too high (D) is the most direct factor contributing to the winner's curse.

​This Factor Contributes to the Winner's Curse

This Factor Contributes to the Winner's Curse