Beware the Winner's Curse - Lucas, Henry C.; Anandalingam, G.

Henry C. Lucas G. Anandalingam 

Beware the Winner's Curse

Victories That Can Sink You and Your Company

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Beware the Winner's Curse

In the roaring 1990s, many companies seemed to claim great victories-acquiring another company, obtaining state-of-the art technology, or hiring a potential CEO savior-only to find that they had made a great mistake. The term "Winner's Curse" was coined by economists to explain an effect
commonly observed in auctions. In such situations, since the winning bidder is usually the most optimistic about the value of the item being auctioned, there is a very good chance that the bid will be more (sometimes much more) than the item is worth. So a company that overvalues a good or
service, or bids higher than its value has the potential of experiencing this Winner's Curse.
In this book, G. Anandalingam and Henry C. Lucas, Jr. expand the model of the Winner's Curse to explain how companies like Tyco, MCI-WorldCom and Bank One overpaid for acquisitions, and how shareholders suffered as a result. They elucidate the disasters that happened during the rush to acquire new
technologies and illuminate the reasons that companies that were seemingly pioneers in the dot-com era fell by the wayside. Beginning by exploring the psychological, personal and market factors that can encourage a decision maker to overvalue an asset and experience the Winner's Curse, the book
goes on to examine several case studies, including the disastrous wireless spectrum auctions that have devastated the telecommunications industry, and the dot-com bust. It concludes by discussing ways to avoid the Winner's Curse, calling for major changes in the behavior of CEOs and members of
boars of directors, as well as the use of powerful techniques for analyzing decisions, including a systems approach to decisionmaking, scenario analysis and game theory.

Beware the Winner's Curse shows how hubris and badly aligned financial incentives lead managersto aggressively pursue victories, and end up worse off as a result. It explores recent disasters in business, sports, and entertainment, and offers concrete steps that managers can take to avoid encountering the curse.

Produktinformation
  • Abmessung: 156mm x 234mm x 16mm
  • Gewicht: 540g
  • ISBN-13: 9780195177404
  • ISBN-10: 0195177401
  • Best.Nr.: 13943688
"In this book, the authors have used an interesting approach in teaching some of the lessons learned in the technology downturn of the early twenty-first century. Beware the Winner's Curse gives us alternative ways of thinking of asset values before we overpay for these assets." -Joseph J. Bonocore, President & CEO, Impresa Technologies, Inc. "Beware the Winner's Curse is a brutally honest review of how often investors lose money when management pursues winning at almost any cost. The authors present abundant examples of corporate hubris that should send shivers down the spine of any director serious about protecting shareownerinterests." -Harvey Seegers, former CEO, Global Exchange Services "Beware the Winner's Curse is an excellent guide for executives who frequently bid on commercial projects. More than a caution against a reckless pursuit of every opportunity, this book provides a model and a framework to systematically evaluate each situation on its own merit. Ever