How to Avoid Winner's Curse in U.S. Government Auctions

If you've ever attended or participated in a U.S. government auction, you'll know how intense the atmosphere can get.
By: BestGovernmentAuctions
May 4, 2010 - PRLog -- With all the bargains and deals available in the auction, strong competition among the bidders cannot be avoided. Many just dig the thrill of the game, while others are attracted not only by the goods offered but as well as by the prospect of winning.

Enticing, isn't it? Many bidders have already fallen prey to winner's curse due to this competition.

What is Winner's Curse?

Hector Milla Editor of the "Best Government Auctions" website -- -- pointed out;

“…Let's say you're eyeing a 10-dollar worth item at a U.S. government auction. The bidding starts at half the original price, and you know how great a bargain the item would be if you get it at that price. Unfortunately, you aren't the only one interested in the item, and a lot of bids have been placed. The competition gets so intense, and emotions are soaring. You get carried away by the prospect of winning that you lose focus on the item's real worth. You bid $9, and another bidder bids for $10. You've reached far into the game and you couldn't afford losing the item to the other bidder, so you bid $11—and you won…”

Great bargain? No, because you paid higher than the item's original price. That's what you call winner's curse.

Can You Avoid Winner's Curse?

Yes, you can avoid winner's curse. Here are a couple of ways to do it:

1. Research. Assuming that you've already seen the items to be auctioned during the previewing period prior to the actual event, remember to shop around. Before you get into the auction, try to find the average price of the item in the market. After you find out, tell yourself that you won't place a bid higher than the item's average price. Otherwise, you'll defeat your purpose for attending the auction, which is to get a bargain.

2. Get hold of your emotion. During the bidding process, remember not to be swayed by your emotions and by the competition. No matter how much you want an item for yourself, and no matter how much you want to emerge a winner, remember that you will only win if you get the item at a price that's less than its actual value in the market.

“…Once you keep these two things in mind, you can now keep your calm when you attend U.S. government auctions, or any other auction for that matter. With discipline and focus, you won't have to worry about getting the winner's curse…” added H. Milla.

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