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The winner's curse: why is the cost of sports mega-events so often underestimated?

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  • Wladimir Andreff

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

Auction theory, when the bidders do not know the value of what is auctionned, is used to explain how the Olympic Games are allocated to competing bidding cities. It is a centralized allocation process with asymmetric information which usually comes out with a winner's curse. Various indicators of the latter are proposed and exemplified, the major one being the systematic ex ante underestimation of the Olympics costs.

Suggested Citation

  • Wladimir Andreff, 2012. "The winner's curse: why is the cost of sports mega-events so often underestimated?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00703466, HAL.
    • Handle: RePEc:hal:cesptp:halshs-00703466
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00703466
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    References listed on IDEAS

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. [経済]オリンピック招致合戦なんかいらない
      by himaginary in himaginaryの日記 on 2012-07-25 12:00:00
    2. Why are Olympic Games always more expensive than planned?
      by Economic Logician in Economic Logic on 2012-07-05 18:36:00

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    Cited by:

    1. Massiani, Jérôme, 2018. "Assessing the economic impact of mega events using Computable General Equilibrium models: Promises and compromises," Economic Modelling, Elsevier, vol. 75(C), pages 1-9.

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    More about this item

    Keywords

    auctions; bids; winner's curse; asymmetric information; cost underestimation; mega sporting events; Olympics;
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