Concept explainers
The “winner’s curse” in auction bidding. In auction bidding, the “winner’s curse” is the phenomenon of the winning (or highest) bid price being above the
- a. Find an estimate of p1, the true proportion of super-experienced bidders who fell prey to the winner’s curse.
- b. Find an estimate of p2, the true proportion of less-experienced bidders who fell prey to the winner’s curse.
- c. Construct a 90% confidence interval for p1 − p2
- d. Give a practical interpretation of the confidence interval, part c. Make a statement about whether bid experience impacts the likelihood of the winner s curse occurring.
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