Prices and the Winner ' s Curse

We extend a model developed by Evans and Jovanovic (1989) to explain when start-ups are credit con- strained. We show that the magnitude of the credit constraint is conditioned by the relative productivity of human capital in both wage work and…

This research utilizes real options theory to investigate how to break the winners curse in contracting through effective contracting mechanisms.We focus on two contracting approaches: flexible price contract and gain-sharing contract. For reasons…

The winner's curse phenomenon refers to the fact that the winner in a common value auction, in order to actually win the auction, is likely to have overestimated the item's value and consequently is likely to gain less than expected and may even…

Auctions, normally considered as devices facilitating trade, also provide a way to probe mechanisms governing one's valuation of some good or action. One of the most intriguing phenomena in auction behavior is the winner's curse - the strong…

We employ a novel approach to identify overbidding in auctions. We compare online auction prices to fixed prices for the same item on the same webpage. In detailed data on auctions of a board game, 42 percent of auctions exceed the simultaneous…

This paper examines the winners curse hypothesis and the bandwagon effect in initial public offerings (IPOs), using Malaysian IPO data from January 2001 to December 2009. The average initial return (offer-to-close) for the 160 Malaysian private…

This paper examines the initial performance of 236 Malaysian IPOs from January 2004 to December 2008. The study finds that the average initial return of the 236 Malaysian IPOs is markedly lower (but still under-priced) than any other average initial…

We usually assume that increases in supply, allocation by rationing, and exclusion of potential buyers reduce prices. But all these activities raise the expected price in an important set of cases when common-value assets are sold. Furthermore, when…

States typically issue compellent threats against considerably weaker adversaries, yet their threats often fail+ Why? Expanding on a standard model of inter- national crisis bargaining, Iarguethatatheoryofreputation-buildingcanhelpshed light on this…

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