Common value auctions with incomplete information

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Reference no: EM131393768

The winner’s curse may occur in common value auctions with incomplete information. It occurs when:

1. a bidder can only afford items that he really doesn’t want.

2. a bidder has to bid too aggressively (high), wins the bid, but is worse off for winning.

3. a bidder comes in with a low bid because he isn’t sure he really wants it, but wins the auction anyway.

4. The bidder gets the item at a price that is less than the seller wants.

Reference no: EM131393768

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