4 ms·
its seems a bit like an agency problem. there is a lot of benefits from being the person who 'wins' the olympics or having political power while construction an
by benmmurphy 10y ago
its seems a bit like an agency problem. there is a lot of benefits from being the person who 'wins' the olympics or having political power while construction and planning for the olympics is going on. so it is not surprising that lots of cities will aggressively bid for the olympics even if it is not necessarily in the general interest. and this intense competition makes it even worse for the winning city :( do you think cities bidding for the olympics understand winners curse?
- LeifCarrotson 10y agoThe article mentions both aspects. Boston's retracted bid was spearheaded by the construction and hospitality industries before being retracted after public outcry. Autocratic regimes are more likely to subvert the overall good and ignore or suppress this outcry for their own private good. And as far as the winner's curse goes: > it is possible to ascribe a portion of the economic failings of the Olympics to the “winner’s curse,” the result in auction theory that when parties are bidding on an asset of uncertain value (like rights to offshore oil leasing tracts), the winner will tend to be the bidder who is most prone to overestimating the value of the asset—which means that the winner is likely to be systematically disappointed (for an overview of the “winner’s curse,” see Thaler 1988). Or see Wikipedia: https://en.wikipedia.org/wiki/Winner%27s_curse https://en.wikipedia.org/wiki/Winner%27s_curse To state it differently, the winner of a contracting project which was awarded to the lowest quote, assuming equal labor costs, is the one who most underestimated its difficulty and scope creep. That helps me understand a few projects I have been involved in.