Have you ever bid in a competitive auction– state, on eBay– and won the product, just to see a comparable item for sale elsewhere at a lower cost? If so, you might have fallen victim to the winner's curse.

In this episode of Choiceology with Katy Milkman (), we look at predisposition that can lead individuals to overpay in auctions and other kinds of negotiations.

We start with the story of Havre de Grace (( horse)). This reward filly had an incredibly effective career as a racehorse before being auctioned as a broodmare. Expectations were high for the sale because Havre de Grace had such a strong pureblood pedigree. But the way the auction continued surprised everybody in the space.

Glenye Cain Oakford () was at the Fasig-Tipton () November Mixed Sale and paints a vivid image of a significant bidding procedure. She is an acclaimed journalist, writer, and videographer based in Lexington, Kentucky. She was the senior bloodstock correspondent at the Daily Racing Type () at the time of the auction

Special thanks to Fasig-Tipton for use of the audio clips from the Havre de Grace auction.

Max Bazerman () has actually contributed important research study to the research study of the winner's curse. He joins Katy to go over the ways in which this phenomenon can impact buying choices around everything from jewelry to oil leases– and how the bias can reduce your capability to negotiate effectively..

Max Bazerman is the Jesse Isidor Straus Teacher of Organization at the Harvard Business School () and the Harvard Kennedy School () and the author of lots of books, consisting of the upcoming book Better, Not Perfect: The Realist's Guide to Optimum Sustainable Goodness (), which will be launched later this year by Harper Collins..

Choiceology is an original podcast from Charles Schwab (). For more on the series, visit schwab.com/podcast ().

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All expressions of viewpoint undergo change without notification in response to shifting market conditions.

The comments, views, and opinions expressed in the presentation are those of the speakers and do not always represent the views of Charles Schwab.

Information contained herein from third-party companies is acquired from what are thought about dependable sources. However, its precision, efficiency or reliability can not be guaranteed.

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