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Title:The winner's curse under behavioral institutions PDF Logo
Authors:Chlaß, Nadine
Issue Date:2011
Series/Report no.:Jena economic research papers 2011,011
Abstract:Empirically, social dilemma under information asymmetry are often much less pronounced than theory predicts. Traders experience a winner's curse and maintain efficiency enhancing exchange of commodities when theory predicts none. Especially under competition, cursed parties undergo severe losses and thereby fund social welfare. Hence, if one cures the winner's curse, one often decreases social welfare. Here, I test how market efficiency can be maintained without individual losses. In a competitive common value auction, parties sidestep both market inefficiency and a winner's curse by judging quality-by-price, and setting price-by-quality.
Subjects:imperfect information
common value auction
price-quality relation
JEL:D61
D82
L13
Document Type:Working Paper
Appears in Collections:Jena Economic Research Papers, MPI für Ökonomik

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