r/statistics • u/Fabrizio333 • 6d ago

Question [Q] Winner's curse Calculation

Hi, I'd like to make an analysis on Procurement Auction/ Call for Tenders, but I can't find the losing bids for every bid in my state (Italy). Can I calculate the winner'curse anyway or what others data can I calculate to make my analysis still informative? Thanks all

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u/SPSSMadeSimple 3d ago

Not in the classic sense, unfortunately. The standard winner's curse calculation needs the spread of bids in the same tender, because the point is that the winner is often the bidder who most overestimated the value. With only winning bids, you cannot see how far the winner was from the next bidder, so you cannot estimate that overestimation directly.

You can still make the analysis informative with what winning bids usually come with. If you have the reserve price or estimated value for each tender, look at the winning bid as a share of that value, and see whether that share falls as the number of bidders rises. That pattern is consistent with stronger competition, even if it is not proof of a curse on its own.

Two other checks are worth adding where the data exist: whether tenders with more bidders are more likely to run into cost overruns, delays, or renegotiation afterwards, and whether the same firms keep winning at unusually low prices. Those ex post outcomes are often the practical consequence people care about when they talk about the winner's curse, and they do not require the losing bids.