Overcoming the Winner's Curse: An Adaptive Learning Perspective

摘要: Even though experience was found to improve decision-making in several tasks, there are instances which learning is ineffective. The current paper studies one example of the last category, namely persisting tendency negotiators bilateral bargaining under asymmetric information ignore decisions their opponent(s), can result negative profits also known as "winner's curse". Bazerman and his colleagues studied this phenomenon extensively using a task "Acquiring Company" task. One surprising finding that even experienced participants showed no adjustment avoid winner's curse. study suggests observed persistence sub-optimal behavior largely due variability environment leads an ambiguous feedback. Since adjust adaptively, i.e., they condition on outcomes previous rounds, have high variance, it difficult for them overcome curse situation. In series experiments we decreased variance payoff. We find decreasing improves performance, but does not completely eliminate However, when were given explicit about expected profit each bid, still overbid, suggesting difficulty learn be partially attributed utility from gambling. results show importance giving noise-free feedback order negotiation skills.