The Winner's Curse

After a long time, i found something interesting to write upon . This concept was witnessed live during my trip to Matheran. A phenomenon exists in economic theories often exemplified as the WINNERS CURSE. Here the winner in a group event may end up being worse off than others. This is more common in auctions but it is even more popular when a group of friends embark upon a trip.

Scene #1: We are all sitting in a hotel in Matheran ready to have breakfast.

Aravindan : Hmmm ... Lots of south Indian dishes here .. I think i will order Idli ..
Pamma & Me: 2 Aloo pohas for both of us ...
Karthik: Well ... the cheapest here seems to be idli -vada .. I will order that ...
Pamma: Don't worry karthik .. Whatever the bill ... it is to be divided equally .. It is very difficult to assign individual bills to persons ..

Rajasekar: Wow !! One masala dosa .. with Amul Cool for me then ...
Gyan: I think Puran Poli will do better for me then ...

Karthik : Hey !! What is this ? I think i better have a 75/- Gujarathi thali for breakfast ....

Suman & Aravindan: Wow !! Man !! Aloo poha is fundoo ... another aloo poha along with idli for breakfast..
Myself & Vikas : Wah Gyan !!! Pooran Poli badhiya hai ... bhaiyya !!! do Puran Poli aur lana ...

Everybody started ordering now all exotic dishes because everybody felt as the bill was being shared .. it was useless to optimize and hence the entire breakfast bill ended up as 500/- for our group ....


Scene #2: In a Nimbu-Pani stall in Matheran ..

Sujay : Hey !! I am feeling thirsty .. Anybody in for a lemon juice ?
Karthik, Aravindan, Suman & Myself: Hey Sujay !! Count us in too ...

Soon others joined ... and the bill was shared in common ... Now one of us felt of having a 2nd glass .. the moment he said he wanted to have a 2nd glass ... 5 others who simply jumped in as they did not want to be affected by winners curse ....

Thus in this winner's curse ... each person does not see as personal optimization of expenses as a way of reducing overall expenses .. The truth is each person simply does not want to subsidize the expense of some other person .. As a result he ends up enjoying himself to the maximum possible at each point ... He might not want to order a dish but as soon as he sees others ordering.. he feels why not give a try ... Anyway everything is gonna be shared and thus this results in him/her trying dishes which he otherwise would never have during such occasions .....

I know that i would not do justice by simply writing a paragraph on it but it is really fun in watching such an event live and often ends up in a lot of jokes and fun all around ...