Veconlab Classroom Clicker Games: The Wisdom of Crowds and the Winner's Curse

The authors present a classroom “clicker” exercise in which students are asked to guess the number of items in a clear container before bidding on a money prize worth a penny for each item. Even if the distribution of guesses is unbiased, the highest bidder is likely to have overestimated the true number and ended up with a loss. Because winning becomes an increasingly rare and informative event as the number of bidders increases, the exercise generates a dramatic “winner's curse” in large classes where clicker systems are commonly used. Initial guesses about the number of items tend to suffer from perception bias, and this partial failure of the “wisdom of the crowds” can make bids even less rational.