winner's curse

The winner's curse occurs in auctions when the winning bidder overestimates an item's value, leading to paying more than it's actually worth. This often happens because bidders listen to others' bids or get caught up in competition, causing their valuation to be inflated. As a result, the winner might end up with an asset that’s not as valuable as they believed, potentially resulting in financial losses. It's a common challenge in auctions and negotiations, highlighting the importance of careful valuation and avoiding overenthusiasm during bidding.