Winner's Curse

In competitive auctions and bidding wars, the winner almost always overpays — because winning means you valued the item more than every other rational participant.

• Oil companies that won competitive government drilling auctions in the 1970s consistently overpaid relative to the oil actually extracted.
• Corporate mergers and acquisitions: the winning bidder in a contested takeover almost always destroys shareholder value — the winner's curse in action.
• eBay auction winners systematically overpay relative to buy-it-now market prices when competitive bidding triggers emotional escalation.