Xfera: What’s A Fair Price?

May 14th, 2010 | By | Category: Casos

XFERA WHAT’S A FAIR PRICE
Instituto de Empresa. Premiado como mejor caso publicado por el IE durante 2002-2003.
It is often the case that the common value is not universally known, but instead
each participant has an internal estimate of the item’s value. The most likely
scenario is that there is a range of such estimates. Barring a systematic bias in
the estimates, the average of the estimates should be closer to the true common
value of the item than any of the individuals’ estimates. If each participant bid is
close to their estimate, the winner is likely to have over-bid and suffer what is
known as the winners’ curse. In other words, the winner is the bidder who has
made the largest possible error in his estimate of the common value1.

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