Request for Proposals -RFP: Avoiding the Winner's Curse
Request For Proposals have become more commonplace as competitive bidding has replaced negotiation for price buyers. It is as if dysfunctional buying practices have arisen to counter dysfunctional selling practices. It is important to judge the seriousness of potential buyers going out to bid, as a lot of the RFPs are, in reality, nothing but hammers used against incumbents to obtain price concessions. That said, many firms have to do a certain amount of RFPs. If you do, you should be well versed with what economists call the winner’s curse. In auction markets, economists refer to the dreaded winner’s curse, whereby the winning bidder is often a loser, because obviously all of the other bidders believed the engagement had less value. In other words, the only request for proposals (RFPs) that buyers will accept are ones you should not make. Join Ed and Ron for strategies you can deploy to avoid the winner’s curse.