An article in the most recent JDM makes two valuable points – sometimes winning is losing, and we’re ok with that. Some individuals are more likely to over-bid, purchasing a lottery for more than it’s best possible value. Why might they do this? Because to some people, very competitive people, it seems that “winning” is as (more?) important than making a genuine profit.
This effect is probably reinforced in circumstances that meet the Winners Curse, in which optimism about ones incomplete information is compounded by a desire to “win”. The very word winning has such positive connotations, how could we not want to win an auction?
For some people, the joy of winning is worth over-paying. And these are the people you DEFINITELY want to invite to your poker game.