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When it comes to setting a bid price, your textbook makes an old joke about...

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Finance

When it comes to setting a bid price, your textbook makes an old joke about the winner's curse - "The low bidder is whoever makes the biggest mistake." What are some potential reasons for firms to underbid on a project? In other words, what accounts for the fact that sometimes firms set a price that is too low to even cover their own costs?

Write a short (6-8 sentence response)

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