Auction Winner's-Curse Haircut

Table of Contents

• Example
• Workflow
• Common Patterns
• Guardrails
• Quick Reference

Example

Scenario: Bidder has estimated a target's value at raw_valuation = $30. Six informed bidders are competing. Estimates across bidders are moderately dispersed (signal_dispersion = 40 out of 100). The target is a well-known commodity (everyone models it similarly).

Inputs:

• raw_valuation: 30
• value_type: common_value
• n_informed_bidders: 6
• signal_dispersion: 40