Winner's Curse

This problem tests your understanding of how competitive auctions can affect deal pricing and bidder behavior. In investment banking interviews, interviewers use this concept to see whether you understand that the winning bidder is not always the one making the best economic decision, especially when rivalry and optimism push valuation beyond a disciplined view of fair value. It also checks whether you can connect auction dynamics to practical consequences such as post deal underperformance, investor scrutiny, and pressure to justify the acquisition thesis.