Lookout Landing · Mar 21, 2022
Jerry Dipoto and the winner’s curse
Jerry and Scott talkin’ game theory and advanced econometricsThe Seattle Mariners are obsessed with the winner’s curse.
No, I’m not referring to a two-decade hangover following the best regular season in MLB history in 2001 — though I suppose that’s happened as well. Rather, I’m referring to a specific econ term that I vaguely remember learning about in a college class on game theory.
Imagine you’re participating in an auction; let’s say you’re bidding for a special kind of tale called a “Trevor” story. You’ve assigned a value to this story (perhaps $120), but you don’t know the value that other buyers have assigned to Trevor, which means you don’t know the true market value of Trevor.