- A-Z
- Jena Economic Resea...
- Volume 5
- The Winner's Curse ...
The Winner's Curse under Behavioral Institutions
- Abgebildete Person
- Erschienen
- 25. November 2011
- Nummer des Discussion-Papers
-
2011-011
- Schlagwort(e)
-
common value auction
imperfect information
price-quality relation
- Zusammenfsg.
-
Empirically, social dilemma under information asymmetry are often much less pronounced than theory predicts. Traders experience a winner’s curse and maintain efficiency enhancing exchange of commodities when theory predicts none. Especially under competition, cursed parties undergo severe losses and thereby fund social welfare. Hence, if one cures the winner’s curse, one often decreases social welfare. Here, I test how market efficiency can be maintained without individual losses. In a competitive common value auction, parties sidestep both market inefficiency and a winner’s curse by judging quality-by-price, and setting price-by-quality.
- article pub. typess JER
- Research article
- article languages JER
- Englisch
- JEL-Classification for JER
- D61 - Allocative Efficiency; Cost–Benefit Analysis ; D82 - Asymmetric and Private Information ; L13 - Oligopoly and Other Imperfect Markets