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Goeree, J. and Offerman, T. (2003b). Winner's curse without overbidding. European Economic Review, 47:625-644.


  • Journal
    European Economic Review

We report the results of a series of second-price auction experiments where each bidder's signal is given by a normally distributed value plus a normally distributed error. While bidders’ values differ in one treatment they are the same in another, which allows for a direct test of the 'winner's curse' irrespective of confounding factors. Bidders may also fall prey to a 'news curse' when they do not sufficiently take into account that signals and errors are correlated. We find that the effects of the winner's curse are mitigated by a news curse and loss or risk aversion.