Winner's curse
In an auction for something of uncertain value, the winner tends to be the one who overestimated it most.
If the item is worth about the same to every bidder, and everyone estimates that value with some error, the highest bid comes from the biggest overestimate. Bid below your estimate. The more bidders and the rougher the estimates, the bigger the cut you need just to break even when you win.
Try it yourself
Five bidders estimate a jar of coins that is worth the same to all of them. Each estimate is off by up to 30 points. If everyone bids their estimate, who usually wins?
3 questions, a minute or two. Nothing to finish first.
Want more? Practise Value and bid.
Play it out: the Sealed-bid auction lab, about five minutes against bots.
Learn and practise it
- Skill: Value and bid