
Beware the Winner's Curse
Victories that Can Sink You and Your Company
Oxford University Press Inc
Published on 18. November 2004
Book
Hardback
256 pages
978-0-19-517740-4 (ISBN)
Description
In the roaring 1990s, many companies seemed to claim great victories-acquiring another company, obtaining state-of-the art technology, or hiring a potential CEO savior-only to find that they had made a great mistake. The term "Winner's Curse" was coined by economists to explain an effect commonly observed in auctions. In such situations, since the winning bidder is usually the most optimistic about the value of the item being auctioned, there is a very
good chance that the bid will be more (sometimes much more) than the item is worth. So a company that overvalues a good or service, or bids higher than its value has the potential of experiencing this Winner's
Curse. In this book, G. Anandalingam and Henry C. Lucas, Jr. expand the model of the Winner's Curse to explain how companies like Tyco, MCI-WorldCom and Bank One overpaid for acquisitions, and how shareholders suffered as a result. They elucidate the disasters that happened during the rush to acquire new technologies and illuminate the reasons that companies that were seemingly pioneers in the dot-com era fell by the wayside. Beginning by exploring the psychological, personal and
market factors that can encourage a decision maker to overvalue an asset and experience the Winner's Curse, the book goes on to examine several case studies, including the disastrous wireless spectrum
auctions that have devastated the telecommunications industry, and the dot-com bust. It concludes by discussing ways to avoid the Winner's Curse, calling for major changes in the behavior of CEOs and members of boars of directors, as well as the use of powerful techniques for analyzing decisions, including a systems approach to decision making, scenario analysis and game theory.
good chance that the bid will be more (sometimes much more) than the item is worth. So a company that overvalues a good or service, or bids higher than its value has the potential of experiencing this Winner's
Curse. In this book, G. Anandalingam and Henry C. Lucas, Jr. expand the model of the Winner's Curse to explain how companies like Tyco, MCI-WorldCom and Bank One overpaid for acquisitions, and how shareholders suffered as a result. They elucidate the disasters that happened during the rush to acquire new technologies and illuminate the reasons that companies that were seemingly pioneers in the dot-com era fell by the wayside. Beginning by exploring the psychological, personal and
market factors that can encourage a decision maker to overvalue an asset and experience the Winner's Curse, the book goes on to examine several case studies, including the disastrous wireless spectrum
auctions that have devastated the telecommunications industry, and the dot-com bust. It concludes by discussing ways to avoid the Winner's Curse, calling for major changes in the behavior of CEOs and members of boars of directors, as well as the use of powerful techniques for analyzing decisions, including a systems approach to decision making, scenario analysis and game theory.
Reviews / Votes
In this book, the authors have used an interesting approach in teaching some of the lessons learned in the technology downturn of the early twenty-first century. Beware the Winner's Curse gives us alternative ways of thinking of asset values before we overpay for these assets * Joseph J. Bonocore, President & CEO, Impresa Technologies, Inc. *More details
Language
English
Place of publication
New York
United States
Target group
Professional and scholarly
Dimensions
Height: 240 mm
Width: 161 mm
Thickness: 19 mm
Weight
558 gr
ISBN-13
978-0-19-517740-4 (9780195177404)
Copyright in bibliographic data and cover images is held by Nielsen Book Services Limited or by the publishers or by their respective licensors: all rights reserved.
Schweitzer Classification
Other editions
Additional editions

G. Anandalingam | Henry C. Jr. Lucas
Beware the Winner's Curse
Victories that Can Sink You and Your Company
E-Book
11/2004
1st Edition
OUP eBook
€29.99
Available for download
Persons
Author
Ralph J. Tyser Professor of Management ScienceRalph J. Tyser Professor of Management Science
Robert H. Smith Professor of Information SystemsRobert H. Smith Professor of Information Systems, both at the Robert H. Smith School of Business, University of Maryland
Content
Part I. The Winner's Curse
1: Origin of the Winner's Curse
2: The Spectrum Auction Fiasco
Part II: How Psychological and Market Factors Promote the Winner's Curse
3: Hubris, and the Urge to Merge and Acquire
4: The Curse Can Appear Anywhere
5: The Mad Scramble to Acquire Optical Technology
6: Dot-coms: On Top of the World for a While
7: Winners and Losers in the Securities Industry
8: Complacency in the Computer Industry
Part III: How Does One Avoid the Winner's Curse?
9: Winning is Not Everything
10: Avoiding the Winner's Curse
1: Origin of the Winner's Curse
2: The Spectrum Auction Fiasco
Part II: How Psychological and Market Factors Promote the Winner's Curse
3: Hubris, and the Urge to Merge and Acquire
4: The Curse Can Appear Anywhere
5: The Mad Scramble to Acquire Optical Technology
6: Dot-coms: On Top of the World for a While
7: Winners and Losers in the Securities Industry
8: Complacency in the Computer Industry
Part III: How Does One Avoid the Winner's Curse?
9: Winning is Not Everything
10: Avoiding the Winner's Curse