The "winner's curse" refers to a situation where the winning bidder's net present value of the project benefits is equal to the net present value of the project costs. the winning bidder would be better off if they had lost in the auction. the winning bidder's consumer surplus is completely captured by the seller. the winning bidder is engaging in "voodoo economics" and becomes cursed.

The "winner's curse" refers to a situation where the winning bidder's net present value of the project benefits is equal to the net present value of the project costs. the winning bidder would be better off if they had lost in the auction. the winning bidder's consumer surplus is completely captured by the seller. the winning bidder is engaging in "voodoo economics" and becomes cursed.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter18: Auctions

Section: Chapter Questions

Problem 8MC

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