At 09:36 AM 3/22/99 -0800, you wrote:
>> to too high. Some firm's engineer will probably guess right, but
>> that firm won't win the auction. The winner will be the firm whose
>> engineer was the most overoptimistic. The winning firm won't
>> ultimately get as much oil as their engineers promised, meaning the
>> firm paid too much. In short, the auction "winner" is
Right. But, on eBay, nobody bids on "*Rare* Old computer! Could be an
Altair, could be a C-64! Bid first, find out later!".
>> This is a particularly clear example because the thing being
>> auctioned will have a definite value in the future that is
>> unknowable at present. But the winner's curse afflicts auction
eBay is not selling futures. It's selling objects which (at least in terms
of classic computers) are not being purchased (by us, anyway) with plans to
resell at a profit. So for us, if we think an altair is worth $10, and
we're outbid, we lose nothing.
The guy who bids $10K and wins, may feel it is worth that much to easily
and quickly obtain something they want. Again, no problem.
The guy who bids $10K and wins, hoping to sell later for more money is
either a) a shrewd investor and we're all just jealous, or b) an idiot who
is going to lose his shirt. In the case of the latter, all it means is
that we have to wait to get the altair for $10 until the fad dies down and
we see naked guys wandering the street carrying altairs. (anyone see that
beyond.com ad during the oscars? That's me. Only not so thin or good
looking, unfortunately.)
It's called Delay of gratification. Learn to be patient, all will come to
you in its time. 8^)
--------------------------------------------------------------------- O-
Uncle Roger "There is pleasure pure in being mad
roger_at_sinasohn.com that none but madmen know."
Roger Louis Sinasohn & Associates
San Francisco, California
http://www.sinasohn.com/
Received on Thu Mar 25 1999 - 11:55:58 GMT