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Beware the Winner's CurseVictories that Can Sink You and Your Company$
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G. Anandalingam and Henry C. Lucas

Print publication date: 2004

Print ISBN-13: 9780195177404

Published to Oxford Scholarship Online: September 2007

DOI: 10.1093/acprof:oso/9780195177404.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 01 March 2021

Winners and losers in the securities industry

Winners and losers in the securities industry

(p.147) 7 Winners and losers in the securities industry
Beware the Winner's Curse

G. Anandalingam (Contributor Webpage)

Henry C. Lucas

Oxford University Press

This chapter focuses on a major force in the economy, and one that is key to the capitalist system: securities markets and the brokerage industry. Although Nasdaq online securities market was one of the first movers in electronic markets, when Electronic Communications Networks (ECNs) came along and siphoned a considerable amount of trade away, Nasdaq, with its very survival in question, took a long time to respond to the threat. The chapter relates the story of how organizational factors made it difficult for the most successful broker, Merrill Lynch, to respond with a new price structure for trading stocks when electronic brokerages like Schwab and e-Trade came along. These examples illustrate a winner’s curse that comes from complacency and the psychological and organizational factors that often prevent a winner from responding to new events and challenges.

Keywords:   Nasdaq, ECN, NYSE, brokerage industry, electronic brokers, Merrill Lynch, Schwab, e-Trade

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