ABSTRACT
In the year 193AD one of the most remarkable items ever went under the hammer: the Roman Empire (see Box 12.1). The auction was won by the boldest bidder, a certain Didius Julianus. Yet, his experience would be repeated by thousands of auction winners after him: Regret at making the winning bid. Many winners of auctions or auction-like contests for items with an objective yet unknown value discover that, with hindsight, they should have bid less. Too often they find themselves with an item worth less than they thought. Of course, overpaying may be the result of auction room fever. However, the phenomenon of regretful winners is particularly frequent in environments where business-like sobriety should prevail: In sales of oil fields, spectrum licences, or corporate takeover bids. The phenomenon of regretful winners-losing money by winning an auction-is known as the winner’s curse.
