The winner's curse: why is the cost of sports mega-events so often underestimated?

Wladimir Andreff (1)

1 CES - Centre d'économie de la Sorbonne

Auction theory, when the bidders do not know the value of what is auctionned, is used to explain how the Olympic Games are allocated to competing bidding cities. It is a centralized allocation process with asymmetric information which usually comes out with a winner's curse. Various indicators of the latter are proposed and exemplified, the major one being the systematic ex ante underestimation of the Olympics costs.

Mots clés: auctions; bids; winner's curse; asymmetric information; cost underestimation; mega sporting events; Olympics

Domaines: Economies et finances

Wladimir Andreff. The winner's curse: why is the cost of sports mega-events so often underestimated?. Wolfgang Maennig et Andrew Zimbalist. International Handbook on the Economics of Mega Sporting Events, Edward Elgar, pp.37-69, 2012. ⟨halshs-00703466⟩