Have you ever placed the highest bid on an item in an online auction, only to later feel like you paid far more than it was worth? This common experience has a name in behavioral economics: the winner’s curse. It describes situations where the winning bidder ends up overpaying, often because of incomplete information or competitive pressure. Today’s discussion explores this phenomenon and how it influences decision-making in auctions and beyond. n nRichard Thaler and Alex O. Imas have co-authored a new book titled “The Winner’s Curse: Behavioral Economics Anomalies, Then and Now,” which revisits classic findings in the field and examines their relevance today. n nFor deeper insights, check out Planet Money’s newsletter that unpacks the psychological traps behind bidding behavior.
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The winner’s curse : The Indicator from Planet Money
Ever put in the winning bid for something on an auction site only to realize you significantly overpaid? Yeah, there’s a phrase for that. On today’s show: the winner’s curse. n nRichard Thaler’s new book with Alex O. Imas is The Winner’s Curse: Behavioral Economics Anomalies, Then and Now. n nRead Planet Money’s newsletter on the winner’s curse.