William Campbell: 2 ideas worth knowing

2 ideas from William Campbell, each explained in a minute and credited to the original work. Free on Savvy.

Winning an auction can be proof that you paid too much
When bidders independently estimate an item's uncertain value — an oil field, a company, a free-agent contract — the winning bid tends to come from whoever overestimated it the mos…
— Edward Capen, Robert Clapp & William Campbell, Competitive Bidding in High-Risk Situations
Winning an auction is itself a warning sign that you paid too much
In any auction where bidders are individually guessing an uncertain true value, the winner is typically whoever overestimated it by the widest margin, not whoever valued it most ac…
— Edward Capen, Robert Clapp, and William Campbell, Competitive Bidding in High-Risk Situations

Five ideas worth knowing, every week