Bid shading

In an auction, bid shading describes the practice of a bidder placing a bid that is below what they believe the good is worth. This may make it less likely that the bidder will win the auction, but it also protects them from overpaying in the cases where they do win. A savvy bidder knows that they don't want to win if it means they will pay more than a good is worth. This is done to avoid the Winner's curse.