Winner’s Curse
Etymology
The term was introduced by three Atlantic Richfield petroleum engineers — Capen, Clapp, and Campbell — in a 1971 paper analyzing why oil companies kept overpaying for offshore drilling leases. It has since spread across auction theory and behavioral economics.
noun phrase · /WIN-erz KURS/
The tendency for the winner of an auction to overpay, because winning means you were the most optimistic bidder.
What it names
A handle for a hidden trap in competitive bidding — from acquisitions to housing to hiring — where the very fact that you won suggests you valued the thing more than everyone else, and probably too much.
Example
The bidding war pushed the house so high above asking that the buyer felt the winner’s curse before the ink dried.
Related idea
It shares DNA with adverse selection: in both, winning or being chosen is itself bad news about the deal — the very act of succeeding selects for the cases you should have avoided.