Winner's curse

Definition:

Problem faced by uninformed bidders. For example, in an initial public offering uninformed participants are likely to receive larger allotments of issues that informed participants know are overpriced.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Deferred compensation

An amount that has been earned but is not actually paid until a later date, typically through a payment plan, pension, or stock option plan.

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