Bid shading
In an auction, bid shading describes the practice of a bidder placing a bid that is below what they believe a good is worth. Bid shading is used for one of two purposes. In a common value auction with incomplete information, bid shading is used to compensate for the winner's curse. In such auctions, the good is worth the same amount to all bidders, but bidders don't know the value of the good and must independently estimate it. Since all bidders value the good equally, the winner will generally be the bidder whose estimate of the value is largest. But if we assume that in general bidders estimate the value accurately, then the highest bidder has overestimated the good's value and will end up paying more than it is worth. In other words, winning the auction carries bad news about a bidder's
primaryTopic
Bid shading
In an auction, bid shading describes the practice of a bidder placing a bid that is below what they believe a good is worth. Bid shading is used for one of two purposes. In a common value auction with incomplete information, bid shading is used to compensate for the winner's curse. In such auctions, the good is worth the same amount to all bidders, but bidders don't know the value of the good and must independently estimate it. Since all bidders value the good equally, the winner will generally be the bidder whose estimate of the value is largest. But if we assume that in general bidders estimate the value accurately, then the highest bidder has overestimated the good's value and will end up paying more than it is worth. In other words, winning the auction carries bad news about a bidder's
has abstract
In an auction, bid shading des ...... than would be optimal for her.
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742,929,975
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In an auction, bid shading des ...... ries bad news about a bidder's
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Bid shading
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