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Published studies of intervention effects probably report effect sizes that are larger than the true effect size. There are probably many reasons for this, but one can be thought of as a "winner's curse." In this essay, I discuss evidence from two recent studies that highlight how evidence clearinghouses might inadvertently expose themselves to the winner's curse, describe reasonable and unreasonable expectations for evidence clearinghouses, then suggest strategies clearinghouses might adopt to reduce their exposure to the winner's curse. [ABSTRACT FROM AUTHOR]

The winner's curse describes the behavioural phenomenon that the winner of a bidding contest pays a price that is too high. This paper shows that experiential learning cannot prevent a winner's curse on the market of corporate control as acquiring firms with acquisition experience still pay a higher price for the target in a bidding contest. Acquisition experience, however, is related to a superior post-acquisition performance of the winning firm after acquisitions associated with a bidding contest. [ABSTRACT FROM AUTHOR]

Combining samples for genetic association is standard practice in human genetic analysis of complex traits, but is rarely undertaken in rodent genetics. Here, using 23 phenotypes and genotypes from two independent laboratories, we obtained a sample size of 3076 commercially available outbred mice and identified 70 loci, more than double the number of loci identified in the component studies. Fine-mapping in the combined sample reduced the number of likely causal variants, with a median reduction in set size of 51%, and indicated novel gene associations, including Pnpo, Ttll6, and GM11545 with bone mineral density, and Psmb9 with weight. However, replication at a nominal threshold of 0.05 between the two component studies was low, with less than one-third of loci identified in one study replicated in the second. In addition to overestimates in the effect size in the discovery sample (Winner's Curse), we also found that heterogeneity between studies explained the poor replication, but the contribution of these two factors varied among traits. Leveraging these observations, we integrated information about replication rates, study-specific heterogeneity, and Winner's Curse corrected estimates of power to assign variants to one of four confidence levels. Our approach addresses concerns about reproducibility and demonstrates how to obtain robust results from mapping complex traits in any genome-wide association study.

Several bankruptcies have occurred in sports media related to overinvestment in football. This research aims to contribute to the extension of the literature on such failures through a further study of business models. This article consists of a case study about Mediapro's arrival in the French sports broadcasting rights market and its rapid downfall. The theoretical framework is based on the concepts of winner's curse and business model, and a detailed review of cases of bankruptcy in sports media. The results of this study demonstrate that the winner's curse is not only the result of the auction process but also the consequence of an unsustainable business model. [ABSTRACT FROM AUTHOR]

I study a model of centralized school choice in which students engage in costly search over schools before submitting preference reports to a clearinghouse. I consider three classes of preferences over schools—idiosyncratic, common, and hybrid—and characterize outcomes under two search protocols—simultaneous and sequential. With idiosyncratic preferences, there are no search externalities, and inefficiencies arise only because of uncoordinated search. Common preferences, however, generate search externalities: when high-priority students search, seats available to lower-priority students are adversely selected. Consequently, sequential search generates greater welfare than simultaneous search with idiosyncratic preferences but not necessarily with common. Additionally, with common preferences, welfare is nonmonotonic in search costs. I also show that the search protocol affects outcome inequality in important ways. For both protocols, I provide an instrument by which a designer can break students' indifferences in search strategies to coordinate search and increase welfare. [ABSTRACT FROM AUTHOR]

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Introduction Genetic associations for variants identified through genome-wide association studies (GWASs) tend to be overestimated in the original discovery data set as, if the association was underestimated, the variant may not have been detected. This bias, known as winner's curse, can affect Mendelian randomization estimates, but its severity and potential impact are unclear. Methods We performed an empirical investigation to assess the potential bias from winner's curse in practice. We considered Mendelian randomization estimates for the effect of body mass index (BMI) on coronary artery disease risk. We randomly divided a UK Biobank data set 100 times into three equally sized subsets. The first subset was treated as the 'discovery GWAS'. We compared genetic associations estimated in the discovery GWAS to those estimated in the other subsets for each of the 100 iterations. Results For variants associated with BMI at P  <   5 × 10–8 in at least one iteration, genetic associations with BMI were up to 5-fold greater in iterations in which the variant was associated with BMI at P  <   5 × 10–8 compared with its mean association across all iterations. If the minimum P -value for association with BMI was P  =   10–13 or lower, then this inflation was <25%. Mendelian randomization estimates were affected by winner's curse bias. However, bias did not materially affect results; all analyses indicated a deleterious effect of BMI on coronary artery disease risk. Conclusions Winner's curse can bias Mendelian randomization estimates, although its practical impact may not be substantial. If avoiding sample overlap is infeasible, analysts should consider performing a sensitivity analysis based on variants strongly associated with the exposure. [ABSTRACT FROM AUTHOR]

Abstract Background Stopping trials early because of a favourable interim analysis can exaggerate benefit. This study simulated trials typical of those stopping early for benefit in the real world and estimated the degree to which early stopping likely overestimates benefit. Methods From 1 million simulated trials, we selected those trials that exceeded interim stopping criteria, and compared apparent benefit when stopped with the true benefit used to generate the data. Each simulation randomly assigned period of observation, number of subjects, and control event rate using normal distributions centred on the same parameters in a template trial typical of real-world “truncated” (i.e. stopped for benefit) trials. The intervention’s true relative risk reduction (RRR) was also randomized, and assumed 1% of drugs have a warfarin-like effect (60% RRR), 5% a statin-like effect (35% RRR), 39% an ASA-like effect (15% RRR), 50% no effect (0% RRR), and that 5% would cause harm (modelled as a 20% relative risk increase). Trials had a single interim analysis and a z-value for stopping of 2.782 (O’Brien-Fleming threshold). We also modelled (1) a large truncated trial based on the SPRINT blood pressure trial (using SPRINT’s parameters and stopping criteria) and (2) the same typical truncated trials if they instead went to completion as planned with no interim analysis. Results For typical truncated trials, the true RRR was roughly 2/3 the observed RRR at the time of stopping. RRR was overestimated by an absolute 14.9% (median, IQR 6.4–24.6) in typical truncated trials, by 5.3% (IQR −0.1 to 11.4) in the same trials if instead carried to completion, and by 2.3% (IQR 0.98–1.09) in large SPRINT-like trials. For all models, to keep the absolute RRR overestimate below 5%, 250 events were required. Conclusion Simulated trials typical of those stopping early for benefit overestimate the true relative risk reduction by roughly 50% (i.e. the true RRR was 2/3 of the observed value). Overestimation was much smaller, and likely unimportant, when simulating large SPRINT-like trials stopping early. Whether trials were large or small, stopped early or not, a minimum 250 events were needed to avoid overestimating relative risk reduction by an absolute 5% or more.

Problem definition: Dynamic forecasting models in auctions have fallen short on two dimensions: (i) the lack of an equilibrium model for final bids and (ii) the lack of a winner's curse (i.e., a tendency to overpay conditional on winning the auction) adjustment to allow bidders to account for a common value component in the auction item. In this paper, we develop a methodology to accurately predict equilibrium stage bids from the initial bidding dynamics and quantify the impact of the winner's curse. This methodology allows us to conduct policy simulations to optimize auction design parameters. Methodology/Results: Dynamic auctions typically have a stage of high exploratory activity, followed by an inactivity period, and then an equilibrium stage of last-minute bids with sharp jumps. With a Kalman filter approach, we use exploratory stage bids to predict an auction item's valuation distribution. We feed this prediction into an equilibrium model and apply item-specific adjustments for winner's curse, bidder heterogeneity, and inactivity period. We use the resulting equilibrium model to predict the equilibrium stage bids. Our methodology improves the forecast of equilibrium stage bids by 11.33%, on average, compared with a state-of-the-art benchmark. This improvement is even higher (18.99%) for common value auctions. We also find that (i) significantly more (respectively, fewer) bidders internalize the winner's curse in common value (respectively, private value) auctions; (ii) bidders in common value auctions decrease their bids by 6.03% because of the winner's curse; and (iii) the inactivity period has a lesser impact on the equilibrium stage bids in private value auctions. Managerial implications: Our proposed methodology is intended to facilitate the need in academia and practice for real-time bid predictions that encompass different levels of the common value component in auctions. Using our methodology, auction platforms can support their choice of minimum bid increment policies and decide how to allocate resources across different auctions to mitigate the adverse effects of the winner's curse. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2022.1165. [ABSTRACT FROM AUTHOR]

Construction and infrastructure bidding is a highly competitive and complicated process that entails various uncertainties faced by contractors. The situation is more complex in multi-stage bidding (MSG) where general contractors must deal with the complexity of accounting for the bids of their subcontractors and face a greater threat of falling prey to the winner's curse (i.e. situation where the winning contractor underestimates the actual cost of the project). Existing research efforts have tackled the issue of the winner's curse in MSG from the general contractor's perspective. However, there is a lack of research in developing bidding models that simultaneously aid both general contractors and subcontractors in determining their bid value to mitigate the winner's curse in MSG. This paper fills this knowledge gap. The authors utilized an interdependent game theory (GT) and reinforcement learning (RL) approach, that includes: formulation of MSG framework; incorporation of two RL algorithms, namely the multiplicative weights and the modified Roth-Erev, to be utilized by subcontractors in preparation of their bids; utilization of MSG game-theoretic bid function for the preparation of the general contractors' bids for the whole project; development of the MSG-GTRL model; and testing the MSG-GTRL model through simulating various bidding scenarios using a combination of actual and synthetic dataset of infrastructure projects. Results show that integrating GT and RL in MSG bidding enables general contractors and their subcontractors to simultaneously improve their financial state by minimizing the occurrence of negative earnings, and thus, avoiding the winner's curse in their respective portions of projects. [ABSTRACT FROM AUTHOR]

Computational methods are used to determine a profit-maximizing shading factor by which rational bidders shade their bid in first price sealed bid auctions for a broad range of realistic scenarios when the prior is diffuse. Bidders' valuations may have both common value and firm-specific components, and the accuracy of their estimates of the common value component may differ. In addition, we allow for a subset of "naive" rivals, defined as bidders who do not account for the Winners' Curse. Our computations show that profit-maximizing shading is greatly impacted by asymmetries in the bidding population and, in particular, by the presence of naive bidders. Failing to account for the presence of naive bidders results in underbidding only in one case, when facing a single rival who is naive, and in overbidding in all other cases. Overbidding is particularly severe when the population of naive competitors is large. [ABSTRACT FROM AUTHOR]

Genome-wide association studies (GWAS) have identified thousands of genetic variants associated with complex human traits, but only a fraction of variants identified in discovery studies achieve significance in replication studies. Replication in genome-wide association studies has been well-studied in the context of Winner's Curse, which is the inflation of effect size estimates for significant variants due to statistical chance. However, Winner's Curse is often not sufficient to explain lack of replication. Another reason why studies fail to replicate is that there are fundamental differences between the discovery and replication studies. A confounding factor can create the appearance of a significant finding while actually being an artifact that will not replicate in future studies. We propose a statistical framework that utilizes genome-wide association studies and replication studies to jointly model Winner's Curse and study-specific heterogeneity due to confounding factors. We apply this framework to 100 genome-wide association studies from the Human Genome-Wide Association Studies Catalog and observe that there is a large range in the level of estimated confounding. We demonstrate how this framework can be used to distinguish when studies fail to replicate due to statistical noise and when they fail due to confounding. [ABSTRACT FROM AUTHOR]

Background: Stopping trials early because of a favourable interim analysis can exaggerate benefit. This study simulated trials typical of those stopping early for benefit in the real world and estimated the degree to which early stopping likely overestimates benefit.Methods: From 1 million simulated trials, we selected those trials that exceeded interim stopping criteria, and compared apparent benefit when stopped with the true benefit used to generate the data. Each simulation randomly assigned period of observation, number of subjects, and control event rate using normal distributions centred on the same parameters in a template trial typical of real-world "truncated" (i.e. stopped for benefit) trials. The intervention's true relative risk reduction (RRR) was also randomized, and assumed 1% of drugs have a warfarin-like effect (60% RRR), 5% a statin-like effect (35% RRR), 39% an ASA-like effect (15% RRR), 50% no effect (0% RRR), and that 5% would cause harm (modelled as a 20% relative risk increase). Trials had a single interim analysis and a z-value for stopping of 2.782 (O'Brien-Fleming threshold). We also modelled (1) a large truncated trial based on the SPRINT blood pressure trial (using SPRINT's parameters and stopping criteria) and (2) the same typical truncated trials if they instead went to completion as planned with no interim analysis.Results: For typical truncated trials, the true RRR was roughly 2/3 the observed RRR at the time of stopping. RRR was overestimated by an absolute 14.9% (median, IQR 6.4-24.6) in typical truncated trials, by 5.3% (IQR -0.1 to 11.4) in the same trials if instead carried to completion, and by 2.3% (IQR 0.98-1.09) in large SPRINT-like trials. For all models, to keep the absolute RRR overestimate below 5%, 250 events were required.Conclusion: Simulated trials typical of those stopping early for benefit overestimate the true relative risk reduction by roughly 50% (i.e. the true RRR was 2/3 of the observed value). Overestimation was much smaller, and likely unimportant, when simulating large SPRINT-like trials stopping early. Whether trials were large or small, stopped early or not, a minimum 250 events were needed to avoid overestimating relative risk reduction by an absolute 5% or more. [ABSTRACT FROM AUTHOR]

Objective: Low balling is one of the major challenges of the auditing profession. Low balling can be unintentional (the phenomenon of the winning curse) or consciously as intentional behavior to enjoy future benefits. The present study focuses on the winner's curse phenomenon. The purpose of this study is to investigate the effect of the winner’s curse phenomenon in low balling on the auditor's efforts in performing the audit tasks. Methods: This study done using laboratory method and game theory. 115 people participated in the games in year 2020 using the sampling method of available sample from the statistical population of accounting students of Shahid Bahonar University of Kerman. The first game is in the simple conditions of the audit market and the second game is an audit market with complex conditions that theoretically include important features of the audit services market. These games were programmed in Z-Tree software. At the time of data collection, due to the specific conditions of Covid-19 disease and the Impossibility of attendance of participants in the laboratory, from the virtual method was used. In this way, using Oracle VM Virtual Box, FileZilla Client and Zunleashed software, links were sent to the participants and they entered the lab space without the need for any special software and just by clicking on these links. Results: The results showed that auditors in both markets, on average, offer prices less than the Risk Neutral Nash Equilibrium. These results are evidence of the existence of the winner's curse phenomenon in the market of auditing services. In addition, the number and extent of this phenomenon in complex conditions of the audit market is greater than the simple conditions of the audit market. Also this study shows auditors who face unexpected losses from the winner’s curse are looking for an opportunity to recoup loss, and therefore, they decide to reduce their efforts to perform audit tasks. Plus, the present study aimed to compare the theory of expected utility and mental accounting showed that mental accounting can be a correct explanation for the behavior of auditors when face the winner's curse phenomenon. The results also showed, the auditors whose under performance was identified and were fined for it, less likely to reduce their efforts in subsequent periods. Auditors, whose underperformance was not identified and who were not fined, are more likely to reduce their efforts in subsequent periods. Conclusion: The results showed that uncertainty in the cost of the audit leads to low-balling due to the occurrence of the winner's curse phenomenon and this source of low-balling threatens the quality of the audit. But when auditors experience penalties for low quality in previous periods, the quality of the audit improves.

We examine takeover auctions when an informed bidder has better information about the target value than a rival and target shareholders. The informed bidder's information is either hard or soft, and only hard information can be credibly disclosed. We show that withholding information creates a winner's curse, thereby serving as a preemption device that deters the rival's participation. In turn, an endogenous disclosure cost arises that induces the informed bidder to optimally withhold favorable information to minimize the acquisition price—breaking down the standard unraveling result, even if his information is always hard. Perhaps surprisingly, stronger competition from the uninformed bidder can reduce the target shareholders' payoff and increase the payoff of the informed bidder while unambiguously improving social welfare. Moreover, "hardened" information can reduce the gains to trade, decreasing welfare, but increasing shareholders' payoff. Our results provide a cautionary note to promoting more competition and more disclosure. JEL Classifications: D44; D82; G34; M41. [ABSTRACT FROM AUTHOR]

As a market liberalization policy to replace the unified feed in price, the reverse auction for energy projects has effectively improved the cost reduction efficiency of all kinds of energy all over the world, but in recent years, the project bidding operators have fallen into a profit bottleneck. In view of this phenomenon, this study modified the Associated Value Model and constructed a dynamic bidding decision-making framework to evaluate the optimal bidding price decision of energy projects with dynamic expectations when the project cost and output were uncertain. This article used the sample data of electricity price bidding and later operation of more than 3 000 large-scale power stations in Europe, America, and the Asia Pacific from 2006 to 2020. The results found that: ‡@ Almost all global energy investment enterprises would fall into the strange circle of ewinnerf s cursef caused by eoverly optimisticf expectations, and the actual operating income of the projects they held was far lower than expected. Driven by the pressure of business expansion, bidders were often more likely to underestimate the cost pressure and risk of project construction and operation and overestimate the power output and income stability of the project. In particular, after the cancellation and prohibition of the joint bidding mechanism, the bidding results became even more radical. Due to the unexpected technological progress and the continuous correction of the expectations of the bidding subject, the overly optimistic expectations exceeded the endogenous technological progress of the industry and became an important driving force for the continuous pressure on the decline of electricity prices. ‡A The current energy industry, especially wind and solar energy, failed to give full play to its potential. With the technological innovation of the new energy industry, it showed a more radical bidding strategy than thermal power projects. Under the pressure of involution bidding, endogenous cost optimization hindered the potential of new energy projects, and the current cost became the most important reason for them to fall into the ewinnerf s curse.f ‡B After considering many factors, such as the learning curve effect, in addition to the financing cost advantage of enterprises, the sample data did not find that internal and external factors, including experience and the market environment, could make enterprises jump out of this strange circle. Even in the past five years or so, the decline in project investment profits caused by the ewinnerf s cursef exceeded the factor of market technological progress and once became the main factor in the decline of power prices for wind power and solar energy projects. Therefore, a healthy and sustainable energy industry policy needs to be based on upstream continuous technological innovation, improve the capital market system based on green finance, ensure the provision of high-quality projects to serve energy consumers, and provide recognition and support from the capital market for energy project investors. [ABSTRACT FROM AUTHOR]

We study from a developmental viewpoint the ability to perform contingent reasoning and the cognitive abilities that facilitate optimal behavior. Individuals from 11 to 17 years old participate in a simplified version of the two-value, deterministic "acquire-a-company" adverse selection game (Charness and Levin, 2009 ; Martínez-Marquina et al., 2019). We find that even our youngest subjects understand well the basic principles of contingent reasoning (offer the reservation price of one of the sellers), although they do not necessarily choose the optimal price. Performance improves steadily and significantly over the developmental window but it is not facilitated by repeated exposure or feedback. High cognitive ability–measured by a high performance in a working memory task–is necessary to behave optimally in the simplest settings but it is not sufficient to solve the most complex situations. [ABSTRACT FROM AUTHOR]

If we have an unbiased estimate of some parameter of interest, then its absolute value is positively biased for the absolute value of the parameter. This bias is large when the signal-to-noise ratio (SNR) is small, and it becomes even larger when we condition on statistical significance; the winner's curse. This is a frequentist motivation for regularization or "shrinkage." To determine a suitable amount of shrinkage, we propose to estimate the distribution of the SNR from a large collection or "corpus" of similar studies and use this as a prior distribution. The wider the scope of the corpus, the less informative the prior, but a wider scope does not necessarily result in a more diffuse prior. We show that the estimation of the prior simplifies if we require that posterior inference is equivariant under linear transformations of the data. We demonstrate our approach with corpora of 86 replication studies from psychology and 178 phase 3 clinical trials. Our suggestion is not intended to be a replacement for a prior based on full information about a particular problem; rather, it represents a familywise choice that should yield better long-term properties than the current default uniform prior, which has led to systematic overestimates of effect sizes and a replication crisis when these inflated estimates have not shown up in later studies. [ABSTRACT FROM AUTHOR]

Avoiding overpricing and irresponsible pricing are two central objectives of the recently enacted Law 14133/2021. This article shows that when trying to achieve the first objective, the new Brazilian public procurement law promotes the second, since a specific command reduces maximum prices until they freeze to the lowest possible values, leading the contractors to the winner’s curse. Public officials are warned that maintaining this command will lead to widespread breaches of contracts and eventual bankruptcy of contractors. The Monte Carlo method is adopted to show that a comprehensive price database will avoid the problem and guarantee the effect intended by the law. [ABSTRACT FROM AUTHOR]

The double dividend of the carbon tax policy has been a controversial topic. To comprehensively evaluate the benefits and risks brought by the carbon tax policy and contribute to China’s emission reduction goals, this paper establishes a carbon tax policy cycle simulation model based on China’s economic and energy data from 2010 to 2020 to explore the winner-curse phenomenons of the policy. To alleviate the winner’s curse of the carbon tax policy, this paper introduces a consumer behavior model to explore the optimization degree of loss aversion effect on the carbon tax policy. The research results show that the carbon tax policy has three kinds of winner’s curse phenomenons, namely, the improvement of environmental quality and the reduction of market capital, the decline of national carbon intensity and the increase of carbon intensity of three major industries, and the reuse of the tax revenue and the increase of economic loss. The loss aversion of consumers can alleviate the negative effect of the carbon tax policy and strengthen the positive effect. In addition, during the implementation of the carbon tax policy, the loss aversion effect can also reduce the polluted population by about 2%. Finally, based on the research results, the paper puts forward some feasible policy suggestions.

The likelihood of a risk factor achieving statistical significance is affected by the overall sample size as well as the distributions of both outcome and predictor variables. Closer attention to confidence intervals and visual displays, in the context of a prespecified determination of effects of interest, contributes to a more comprehensive understanding of the results of a data analysis. [ABSTRACT FROM AUTHOR]

We analyze the bidding behavior of expectations-based loss-averse bidders in auctions with interdependent values. We emphasize the difference between the risk bidders face over whether they win the auction (extensive risk) and the risk they face over the value of the prize conditional on winning (intensive risk). The extensive risk creates an "attachment" effect, whereas the intensive risk operates via a "comparison" effect. How loss-averse bidders react to these different risks depends on whether they incorporate their bid into their reference point. Under "unacclimating personal equilibrium" (UPE), where bidders keep their expectations fixed when choosing their bids, both the extensive and intensive risks induce them to bid more aggressively. Moreover, bidders are exposed to the "winner's curse" and a seller can attain higher revenue by hiding information in order to leverage the intensive risk. By contrast, under "choice-acclimating personal equilibrium" (CPE), where a bid determines both the reference lottery and the outcome lottery, the intensive risk creates a "precautionary bidding" effect that pushes bidders to behave less aggressively; whether this effect is reinforced or undermined by the extensive risk depends on a bidder's likelihood of winning the auction. Furthermore, bidders are less aggressive than under UPE and can be subject to a "loser's curse." Yet, by committing to bidding less aggressively, such as by engaging in proxy bidding, loss-averse bidders are better off under CPE than UPE. This paper was accepted by Ilia Tsetlin, decision analysis. [ABSTRACT FROM AUTHOR]

My aim in this paper is to show how the problem of inflated effect sizes (the Winner's Curse) corrupts the severity measure of evidence. This has never been done. In fact, the Winner's Curse is barely mentioned in the philosophical literature. Since the severity score is the predominant measure of evidence for frequentist tests in the philosophical literature, it is important to underscore its flaws. It is also crucial to bring the philosophical literature up to speed with the limits of classical testing. The Winner's Curse is one of them. The problem is that when a significant result is obtained by using an underpowered test, the severity score becomes particularly high for large discrepancies from the null-hypothesis. This means that such discrepancies are very well supported by the evidence according to that measure. However, it is now well documented that significant tests with low power display inflated effect sizes. They systematically show departures from the null hypothesis H0 that are much greater than they really are. From an epistemological point of view this means that a significant result produced by an underpowered test does not provide evidence for large discrepancies from H0. Therefore, the severity score is an inadequate measure of evidence. Given that we are now aware of the phenomenon of inflated effect sizes, it would be irresponsible to rely on the severity score to measure the strength of the evidence against the null. Instead, one must take appropriate measures to try and avoid using underpowered tests by setting a threshold for the sample size or by replicating the results of the experiment. [ABSTRACT FROM AUTHOR]

The goal of expression quantitative trait loci (eQTL) studies is to identify the genetic variants that influence the expression levels of the genes in an organism. High throughput technology has made such studies possible: in a given tissue sample, it enables us to quantify the expression levels of approximately 20 000 genes and to record the alleles present at millions of genetic polymorphisms. While obtaining this data is relatively cheap once a specimen is at hand, obtaining human tissue remains a costly endeavor: eQTL studies continue to be based on relatively small sample sizes, with this limitation particularly serious for tissues as brain, liver, etc.-often the organs of most immediate medical relevance. Given the high-dimensional nature of these datasets and the large number of hypotheses tested, the scientific community has adopted early on multiplicity adjustment procedures. These testing procedures primarily control the false discoveries rate for the identification of genetic variants with influence on the expression levels. In contrast, a problem that has not received much attention to date is that of providing estimates of the effect sizes associated with these variants, in a way that accounts for the considerable amount of selection. Yet, given the difficulty of procuring additional samples, this challenge is of practical importance. We illustrate in this work how the recently developed conditional inference approach can be deployed to obtain confidence intervals for the eQTL effect sizes with reliable coverage. The procedure we propose is based on a randomized hierarchical strategy with a 2-fold contribution: (1) it reflects the selection steps typically adopted in state of the art investigations and (2) it introduces the use of randomness instead of data-splitting to maximize the use of available data. Analysis of the GTEx Liver dataset (v6) suggests that naively obtained confidence intervals would likely not cover the true values of effect sizes and that the number of local genetic polymorphisms influencing the expression level of genes might be underestimated. [ABSTRACT FROM AUTHOR]

Purpose -- This article sought evidence of the existence of the as Winner's Curse, among the participants of the 8th Reserve Energy Auction promoted by Brazilian government. Design/methodology/approach -- In order to perform the study, we opted for the use of Multidimensional Scaling to identify groups that have similarities to search for evidence related to the Winner's Curse, characterizing it as descriptive quantitative research of an exploratory nature. Findings -- The results showed that among the 53 projects studied, thirteen are with their schedules delayed, pointing for possible asymmetries among the bidders related to the logistics of their enterprises. The results also calling into question the energy security strategy carried out by the Brazilian government, by allowing several ventures terminating their contracts, coulding also be evidence of the winner´s curse among the future winners of this new model of auction. Research limitations/implications -- The principal limitation is in the choice of only one Brazilian auction for explorer the auctions specially the auctions Brazilians energy. Practical implications -- In the practical implications that research demonstrated than bidders don't planned yours power plants, causing delays or suspension in constructions, evidence of possible existing winner's course in between bidders. Originality/value -- Too was demonstred than in a competition where the products are homogeneity, the example of the energy, the information, experience and relationship between competitors, can to do one enterprise win a auction; but if the anxiety for win is bigger, and doesn't consider basic aspects such as costs the company will have great difficulties in fulfilling its contracts and future sanctions may occur. [ABSTRACT FROM AUTHOR]

Research examining underpricing in social infrastructure projects has been limited (e.g., schools), yet this is a reality that confronts many governments worldwide. The upshot of underpricing is often contractual claims and delays, which can harm the social and economic well-being of citizens. Cognizant of experiencing potential cost overruns, this paper demonstrates that agencies within the Brazilian public sector institutionalized the winner's curse to ensure their infrastructure projects did not exceed their budgets. This action resulted in contractors abandoning works before they were completed and, in doing so, being subjected to contractual sanctions. For the government agencies, this led to increased costs because an alternative contractor was required to complete works. The decision to accept a low bid, therefore, had the opposite of the desired effect because the final project costs exceeded their budgets. It is proposed that government agencies introduce an irresponsible bid threshold, which acts as a benchmark for determining a bid's disqualification to address the winner's curse phenomenon. [ABSTRACT FROM AUTHOR]

As procurement auctions increasingly move to digital platforms, more data and information is available (or can be made available) to bidders. Despite this trend, relatively little is known about the impact of information asymmetries in these settings. We investigate two such differences in first‐price sealed‐bid reverse auctions with a common value. In a design that mirrors real construction procurement auctions, our laboratory experiment tests the impact of the precision of a bidder's cost estimate and the degree to which bidders know the inherent cost estimate precisions in the auction. We find that more understanding of estimate precision decreases bidder profit, counter to our expectation; however, we also find evidence of strategic behavior from those bidders that ratchets up pressure on competitors and pushes competitors toward bankruptcy. Most notably, understanding just one's own precision can help avoid the winner's curse in some settings. The same result does not apply if bidders also know their competitor's precision; more information does not help. The implication from our realistic setting—that reduced uncertainty may not help the bidder—raises important questions about the degree of transparency that is optimal in procurement auctions. [ABSTRACT FROM AUTHOR]

The design and implementation of online auctions has given rise to a unique set of bidding strategies that has stimulated a growing body of research. We make use of a theoretically grounded, well-understood, and empirically observable bidder behavior-the winner's curse adjustment for the expected number of bidders in an auction-to examine the relationships between bidder experience, bidding patterns, and the winner's curse adjustment in rare coin online auctions. We also examine the impact of uncertainty on the winner's curse adjustment, both by using precise measures of uncertainty and by considering seller and bidder strategies for reducing that uncertainty. We analyze a complete record of all auctions in a three-month period for rare U. S. coins, examining 284,681 bids from 62,625 auctions hosted by eBay, the market leader in online auctions. One of the main contributions of this paper is to demonstrate that the bidding patterns associated with different bidders are strongly related to whether they calculate their bids to take into account the number of competing bidders, as predicted for common-value auctions. This is a substantial extension and empirical confirmation of prior work that has explored the implications of different observed patterns of bidding. We also explore new territory by examining the relationships between bidder experience, bidding patterns observed, and the economic outcomes for bidders. We are able to show that bidders with more domain-specific experience (rather than general auction experience) make better adjustments for the winner's curse, that experience has an effect on the type of bidding strategy, and that the type of bidding strategy has a significant effect on the economic outcomes for the bidders. [ABSTRACT FROM AUTHOR]

Internet auction companies have developed innovative tools that enable sellers to reveal more information about their credibility and product quality to avoid the “lemons” problem. On the basis of signaling and auction theories, the authors propose a typology of Internet auction quality and credibility indicators, adopt and modify Park and Bradlow's (2005) model, and use eBay as an example to examine empirically how different types of indicators help alleviate uncertainty. This empirical evidence demonstrates how Internet auction features affect consumer participation and bidding decisions, what modifies the credibility of quality indicators, and how different buyers react to indicators. The signaling-based hypotheses provide coherent explanations of consumers' bidding behavior. As the first empirical study to evaluate the signaling role of comprehensive Internet auction institutional features in mitigating the adverse selection problem, this research provides evidence to clarify the economic foundation behind innovative Internet auction designs. [ABSTRACT FROM AUTHOR]

The Winner’s Curse (WC) is one of the most robust and persistent deviations fromtheoretical predictions that has been established in experimental economics and claimed to exist in many field environments. There have been many attempts to explain the winner’s curse, such as ignoring the cognition process of other agents, having a cursed system of beliefs, the presence of level-k heterogeneity and beliefs, and/or misunderstanding the game. In order to capture the underlying roots of this behavior, we design and implement in the laboratory a simplified version of the Acquiring a Company game. Our transformation reduces the game to an individual-choice problem, but one that still retains the key adverse-selection issue that results in the WC. We also conduct a treatment in which one can vastly simplify the problem using ordinal reasoning rather than cardinal reasoning. Our main results find that the WC is alive and well in all of these environments where equilibrium theories, based on relaxed belief structures, are mute. Our results also suggest that the WC is better explained by bounded rationality of the form that people have difficulties either performing Bayesian updating or performing contingent reasoning on future events. To delve more deeply into the issue, we added a treatment that presents the game as a choice among simple lotteries that are equivalent to the bidding choices available, but which circumvents the need to perform contingent reasoning on future events.

Online auctions are now widely used, with all the convenience and efficiency brought by internet technology. Despite the advantages over traditional auction methods, some challenges still remain in online auctions. According to the World Business Environment Survey (WBES) conducted by the World Bank, about 60% of companies have admitted to bribery and manipulation of the auction results. In addition, buyers are prone to the winner’s curse in an online auction environment. Since the increase in information availability can reduce uncertainty, easy access to relevant auction information is essential for buyers to avoid the winner’s curse. In this study, we propose an Online Auction Price Suggestion System (OAPSS) to protect the data from being interfered with by third-party programs based on Intel’s Software Guard Extensions (SGX) technology and the characteristics of the blockchain. Our proposed system provides a smart contract by using α-Sutte indicator in the final transaction price prediction as a bidding price recommendation, which helps buyers to reduce the information uncertainty on the value of the product. The amount spent on the smart contract in this study, excluding deployed contracts, plus the rest of the fees is less than US$1. Experimental results of the simulation show that there is a significant difference (p < 0.05) between the recommended price group and the actual price group in the highest bid. Therefore, we may conclude that our proposed bidder’s price recommendation function in the smart contract may mitigate the loss of buyers caused by the winner’s curse.

This paper proposes a structural non-equilibrium model of initial responses to incomplete-information games based on "level-k" thinking, which describes behavior in many experiments with complete-information games. We derive the model's implications in first- and second-price auctions with general information structures, compare them to equilibrium and Eyster and Rabin's (2005) "cursed equilibrium," and evaluate the model's potential to explain behavior in auction experiments. The level-k model generalizes many insights from equilibrium auction theory. It also allows a unified explanation of the winner’s curse in common-value auctions and overbidding in those independent-private-value auctions without the uniform value distributions used in most experiments.

Reverse auction theory is the basis for competitive construction bidding process. The lowest bid method is utilized for selecting contractors in public projects. The winning contractor having the lowest bid value could be cursed when the submitted bid value results in negative profits. This is caused by many factors such as the contractor's estimation accuracy and markup. This is addressed in this paper by providing a model simulating the construction competitive bidding and the occurrence of the winner's curse. To this end, the authors show the extent to which the winner's curse affects the status of contracting companies. The objectives are to understand the characteristics of the competitive bidding phase in construction and to study the behavior of contractors subject to competitive bidding and the occurrence of the winner's curse. As such, the authors implemented a two-step methodology that incorporates (1) developing a general simulation model involving a population of contractors and projects using agent-based modeling for the competitive bidding process and (2) analyzing the results of the simulation model. This model should provide a better understanding to the construction profession as in contractors, project owners and Departments of Transportation of how decisions are made in this bidding environment. [ABSTRACT FROM AUTHOR]

This is the first study to test for a winner's curse in a bubble market. Our hand‐collected sample comprises the sequence of bids and the experience of the winning bidder at Irish residential real estate auctions, prior to the collapse of the bubble. Portfolios of practitioner‐ and hedonic pricing model‐selected self‐similar properties provide benchmark property price estimates. We show neither real estate investors nor owner occupiers shade auction bids to avoid the winner's curse and both raise bids in line with competition. Winning investor bidders pay more for properties, ride the wave of a property bubble, and potentially exacerbate it. [ABSTRACT FROM AUTHOR]

In the renewable energy sector of India, the system of Feed-in-Tariff (FIT) is being rapidly replaced by the mechanism of e-reverse auctions to discover the lowest tariff. 23.375 GW of solar, wind and hybrid capacity has been auctioned by central and state agencies during the period 2017–2018. The auctions resulted in historical low bids, due to the expectation of low price of capital goods like solar modules. The highest winning bids in solar auctions were, on an average, 36.49% less than the ongoing solar FIT in the states that held the e-reverse auctions. Consequently, the FIT has been revised downward. While the auctions proved to be cost effective, commissioning of projects remains a suspect. Only 58.6% of solar capacity allocated through the auctions held in 2017 got commissioned by the end of 2018. Project developers face the winner's curse due to increased import price of solar modules. The bids were revised upward in 2018, due to expected cost escalation because of safeguard duty imposed on import of solar panels. 8 GW solar bids got cancelled in FY 2018–19. Deployment of projects got affected as the distribution companies attempted to force winners of auctions to match tariff with lowest bids in subsequent auctions. This article evaluates the e-reverse auctions on account of their impact on price, deployment and financing of projects. • 23.375 GW of renewable capacity has been allocated via e-reverse auctions. • Winning bids were up to 58.19% lower than ongoing feed-in-tariff. • Developers will encounter the winner's curse due to rising capital cost. • Commissioning of projects may suffer because of safeguard duty on solar panels. • Financing the projects may be a problem for smaller developers. [ABSTRACT FROM AUTHOR]

We argue that the market for audit services resembles a common value procurement auction in that there is common uncertainty regarding audit cost and auditors generate a private estimate of cost prior to quoting a price. We examine two audit markets that take this form of market institution. First, we examine a simple market setting where auditors determine only price and interact with robot clients. Next, we examine an enriched market setting that incorporates theoretically important features of the market for audit services. We find that auditors in the simple audit market learn to avoid the winner's curse with pricing experience but this learning effect is hindered in the enriched market. Auditors in the enriched market reduce audit effort when they suffer the winner's curse. Our evidence suggests that low balling can occur due to the winner's curse, and this source of low balling poses a threat to audit quality. [ABSTRACT FROM AUTHOR]

Bidders' behavior in auction formats has always been a widely discussed issue by traditional economics, whose most prominent theories, such as game theory, seek to predict from a normative standpoint, the best strategy that should be followed in order to maximize the utility function. However, there is scientific evidence that suggests that bidders, even in public procurement scenarios, deviate systematically from the expected rational behavior and instead of making a profit by winning an auction, they incur losses subsequently. The following paper seeks to shed some light on a phenomenon known as 'The Winner's curse' and how its existence and effects in public procurement, broaden the analysis of the 'abnormally low tenders' issue, by suggesting a methodology both qualitative and quantitative for its validation in Public Works contracts. [ABSTRACT FROM AUTHOR]

There is evidence that bidders fall prey to the winner's curse because they fail to extract information from hypothetical events—like winning an auction. This paper investigates experimentally whether bidders in a common value auction perform better when the requirements for this cognitive issue—also denoted by contingent reasoning—are relaxed, leaving all other parameters unchanged. For my underlying research question, I used a lab experiment with two stages. In stage I, the subjects participate in a non-standard common value auction, called the wallet game, in which a naïve bidding strategy can lead to both winner's curse and loser's curse. In stage II, the subjects in the treatment group learn whether their initial bid was the winning bid or not and they get the opportunity to change this bid. In this sense, the bidders face the same decision problems as in stage I again, but the need for hypothetical thinking is reduced in stage II. The overall pattern of the data suggests that the problem of irrational over- and underbidding can be weakened by giving the subjects ex ante feedback about their bid, but unlike related studies I also find negative effects of additional information. [ABSTRACT FROM AUTHOR]