Gourmet adventures is a very nice exercise to demonstrate the Winner’s curse in class. The key takeaway there is that decision-makers need to try to understand how certain they are in order to figure out how much to shade their bids — something that few managers actually do. If you have an online course or don’t have time to do this in class, you might consider this simple winner’s curse online simulation (by Mike Shor). The Java applet works nicely to simulate bidding competition over a target including an estimate of the private synergies. Note that you may have to turn off popup blockers and lower security settings for the web page to run properly.
Contributed by Russ Coff