Alan Pardew and the winner's curse

West Ham boss Alan Pardew reminds me of something I've said before: if you want to understand stock markets, it’s better to read the sports pages than the financial pages.
He says he paid "slightly over the odds" for Dean Ashton. This is a good example of the winner's curse. When an asset of uncertain value is put up for auction, it's likely to be sold for more than it's worth, because there's a good chance that the highest bidder will over-estimate it's value.
This might explain a well-known fact about stock markets - that newly floated companies, on average, under-perform over the long-run; Jay Ritter summarizes the data in this pdf.
For some other applications of the winner's curse, check out the papers collected at this great site.
Another thing: it's not often West Ham are associated with winners. The standard view of them was expressed by Ronnie Biggs. When he was on the run in Brazil the 1980s, he was visited by a journalist. Whilst they were chatting over drinks, Biggs said: "I see West Ham have lost." "How do you know?" asked the journo.  "Well" said Biggs: "It's Saturday, ain't it?"

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[Ed]

Interestingly after Pardew admitted that the Hammers had paid "over the odds" for Ashton he also said that it was "a statement ot the club's intent." Presumably West Ham are now intending to pay over inflated prices in all future transfer deals.