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The Winner's Curse

How to Play

Welcome to the ultimate test of bidding strategy.

  • You will bid on 20 items with unknown true values.
  • The true value of each item is randomly chosen between $0 and $100.
  • If your bid is greater than or equal to the true value, you win the item!
  • When you win, you immediately sell the item for 150% of its true value.
  • If you bid too low, you lose nothing and win nothing.
  • You start with a bankroll of $500.

Beware: The highest bidder often loses money. Can you beat the math?

Round 1/20
Balance: $500.00
$0 $?? $100

Place Your Bid

Item value is between $0 and $100.

$

Balance Trend

Auction History

Game Over

Final Balance

$500.00

The Math Behind The Curse

In an auction where the true value is unknown (e.g. 0 to 100), the expected true value of an item given that you win (i.e. your bid B >= true value V) is roughly B/2.

Even though you can sell it for a 50% premium (1.5 * V), your expected resale value is 1.5 * (B/2) = 0.75 * B.

So, on average, winning a bid of B earns you 0.75B. Your profit is 0.75B - B = -0.25B.

This is the Winner's Curse: winning the auction often means you overpaid!