The Indicator from Planet Money

Episode Title: The winner's curse
Date: November 17, 2025
Length: ~10 minutes
Host: NPR

Episode Overview

In this episode of The Indicator, the show dives into the concept of the "winner's curse"—a phenomenon rooted in economics and auctions that often leaves the top bidder worse off than anticipated. The host uses engaging storytelling and accessible examples to illustrate how the winner's curse appears in everything from high-stakes business deals to everyday purchases and even job negotiations. The episode's aim is to illuminate why being the "winner" can sometimes mean losing out, and what lessons listeners can draw for their own financial and professional decisions.

Key Discussion Points & Insights

What is the Winner's Curse?

• Definition: The host explains that the winner's curse arises when the winner of an auction or competition ends up overpaying due to incomplete information or over-optimism about the asset's value.
  • Memorable Quote:
    • Host (00:37): “It’s that feeling when you should be celebrating, but instead, you realize you might have made a pretty expensive mistake.”
• Context Setting: The example of bidding on a jar of coins where the winner, by outbidding everyone else, has probably overestimated the coin value.

Real-World Examples

• Business Acquisitions: The phenomenon frequently plays out in corporate takeovers, where the competition drives up prices beyond what’s rational.
  • Host (02:05): “In the business world, this happens all the time—companies get so caught up in the battle to win a merger, they forget to ask if the prize is worth the price.”
• Everyday Life: The episode touches on relatable scenarios—bidding wars for houses, job negotiations, or even concert tickets.
  • Host (04:16): “Ever paid too much for a house after a bidding war? That sinking feeling is textbook winner’s curse.”

Why Do Smart People Fall for It?

• Behavioral Economics Angle: Humans tend to overvalue things when competing and underestimate hidden costs or risks.
• The Cost of Imperfect Information: Most auctions or negotiations involve uncertainty—about quality, future value, or competitor intentions—which feeds into the curse.

How to Avoid the Winner’s Curse

• Do Your Homework: Research and knowledge of true value can prevent overbidding.
• Set Limits: Pre-defined walkaway points help maintain discipline.
  • Host (08:11): “Before you enter any bidding war—know your ceiling. Otherwise, it’s all too easy to get swept up and lose more than you bargained for.”
• Takeaways for Listeners: Whether buying, selling, or accepting a job offer, understanding the winner’s curse can help you make smarter, less emotional decisions.

Notable Quotes & Memorable Moments

• Host (00:37): “It’s that feeling when you should be celebrating, but instead, you realize you might have made a pretty expensive mistake.”
• Host (02:05): “In the business world, this happens all the time—companies get so caught up in the battle to win a merger, they forget to ask if the prize is worth the price.”
• Host (04:16): “Ever paid too much for a house after a bidding war? That sinking feeling is textbook winner’s curse.”
• Host (08:11): “Before you enter any bidding war—know your ceiling. Otherwise, it’s all too easy to get swept up and lose more than you bargained for.”

Important Timestamps

• 00:37 — Host explains the winner's curse in simple, memorable language.
• 02:05 — Real-world corporate example: how mergers and acquisitions can fall prey to the curse.
• 04:16 — Application to personal finance and everyday life—housing and job negotiations.
• 08:11 — Practical advice: how listeners can avoid falling for the winner’s curse.

Summary Conclusion

This episode of The Indicator offers a concise but impactful exploration of the winner’s curse, using stories and clear explanations to show why winning isn’t always a victory—especially in high-stakes financial decisions. With practical advice and memorable examples, it arms listeners with the tools to avoid outbidding themselves—whether at work, in business, or at home.