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MENTAL MODEL · M0466

Winner's Curse

Winner's Curse
BusinessHigh supportEconomics
Included
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Version 1.0.0 · Updated 2026-07-30

CORE DEFINITION

In an auction, the highest bidder is often the one who overestimates the value of the item, and winning the auction may actually be disadvantageous.

SCAFFOLDING EFFECT

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Auction winners often become actual losers due to overestimation.

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The winner's curse refers to the phenomenon in auctions where the highest bidder often pays more than the true value of the item due to excessive optimism or insufficient information, ultimately becoming a 'winner who is actually a loser'. It is a systematic bias in common value auctions.

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Source support: Explicit

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    en.wikipedia.orghttps://en.wikipedia.org/wiki/Winner%27s_curseZH · Explicit
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