The Satisficer's Curse

9 Pages Posted: 23 May 2008

See all articles by Robert E. Marks

Robert E. Marks

UNSW Australia Business School, School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: April 27, 2008

Abstract

Following the Winner's Curse and the Optimizer's Curse, this paper introduces the Satisficer's Curse. The Winner's Curse requires competition between agents in an auction for, usually, a common-value item; the recently named Optimizer's Curse is a systematic overvaluation when the decision maker is choosing the highest valued prospect of a set of uncertain future outcomes. The Satisficer's Curse is a systematic overvaluation that occurs when any uncertain prospect is chosen because its estimate exceeds a positive threshold. It is the most general version of the three curses, all of which can be seen as statistical artefacts.

Keywords: decision analysis, investment, probability, ex-post disappointment

JEL Classification: D81, C44, G11

Suggested Citation

Marks, Robert E., The Satisficer's Curse (April 27, 2008). Available at SSRN: https://ssrn.com/abstract=1136039 or http://dx.doi.org/10.2139/ssrn.1136039

Robert E. Marks (Contact Author)

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia
+61 2 9931 9271 (Phone)

HOME PAGE: http://www.agsm.edu.au/bobm

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