The Winner_s Curse - The Winner's Curse by David Marasco http/www.thediamondangle.com/archive/oct01/wincurse.html It's the middle of winter Right

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
The Winner's Curse by David Marasco; http://www.thediamondangle.com/archive/oct01/wincurse.html It's the middle of winter. Right now GMs are hitting the phones talking to player agents, trying to sign the men they think will push them over the top next season. The fans enter the season with great expectations. Yet so many times the player thought to be a savior to the team ends up not being worth the money it took to sign him. Is it because free agents go lose their edge after signing their big-money contracts? Seeing as many of these guys were set for life before they switched teams, this explanation doesn't seem to work. To find the real answer, we have to drill for oil. Back in the 1950s the players in the American petroleum industry turned their eyes to the Gulf of Mexico. With newer technology it was possible to drill offshore. So the race began and the oil companies bid for drilling rights and set up operations. There was only one problem. These offshore oil wells weren't turning a profit. Is drilling on the seabed harder than drilling on dry land? Sure, but that wasn't the difficulty. The real problem was the bidding process given the uncertainties in information available to the oil companies. This was explained in an article published in the Journal of Petroleum Technology titled "Competitive bidding in high risk situations," by Capen, Clapp and Campbell of the Atlantic Richfield Company (ARCO) in 1971. Here they coined the term "winner's curse."
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/15/2009 for the course EWMBA 201A taught by Professor Wolfram during the Fall '07 term at University of California, Berkeley.

Page1 / 2

The Winner_s Curse - The Winner's Curse by David Marasco http/www.thediamondangle.com/archive/oct01/wincurse.html It's the middle of winter Right

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online