Editing Winner's curse (section)

==Examples==
Since most auctions involve at least some amount of common value, and some degree of uncertainty about that common value, the winner's curse is an important phenomenon.

In the 1950s, when the term ''winner's curse'' was first coined, there was no accurate method to estimate the potential value of an offshore [[oil field]]. So if, for example, an oil field had an actual intrinsic value of $10 million, oil companies might guess its value to be anywhere from $5 million to $20 million. The company who wrongly estimated at $20 million and placed a bid at that level would win the auction, and later find that it was not worth as much.

Other auctions where the winner's curse is significant:
*[[Spectrum auction]]s in which companies bid on licenses to use portions of the [[electromagnetic spectrum]]. Here, the uncertainty would come from, for example, estimating the value of the cell phone market in [[New York City]].
*[[Initial public offering|IPO]]s, in which bidders need to estimate what the [[market value]] of a company's [[stock]] will be.
*[[Pay per click]] advertising online, in which advertisers gain higher ranking if they bid higher amounts per click from a search engine user.
*Federal offshore oil leases: the term ''winner's curse'' was originated in a paper published in the ''Journal of Petroleum Technology'', volume 23, 1971, pages 641-653.  The authors were Capen, Clapp & Campbell.
*Free agency in professional sports.