The Satisficer’s Curse

Robert Marks

No 2013-28, Discussion Papers from School of Economics, The University of New South Wales

Abstract: Following the Winner’s Curse and the Optimizer’s Curse, this paper introduces the Satisficer’s Curse. The Winner’s Curse requires competition between agents in an auction for, usually, a common-value item; the Optimizer’s Curse is a systematic overvaluation when the decision maker is choosing the highest-valued prospect of a set of uncertain future outcomes. The Satisficer’s Curse is a systematic overvaluation that occurs when any uncertain prospect is chosen because its estimate exceeds a positive threshold. It is the most general version of the three curses, all of which can be seen as statistical artefacts.

Keywords: decision analysis; investment; probability; ex-post disappointment; winner's curse (search for similar items in EconPapers)
JEL-codes: C44 D81 G11 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2013-10
New Economics Papers: this item is included in nep-mic
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