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The ever-present overbid on tracts in sales in the outer continental shelf and Alaska is an intrinsic part of the sealed bid process. Overbidding results from the manner in which bids are compiled, as well as from the absence of knowledge of competitors' bids. Sales by sealed bid involving a cash bonus and a minimum royalty result in the maximum amount of cash going to the seller, and tend to depress the rate of return to the buyer.
Since the beginning of federal sealed bid sales in 1954, the overbid (often called "the money left on the table") has averaged 45% of the winning bid for tracts with a second bid. If single bids are included as overbids, the overbid percentage is 51% since 1954.
A linear regression (with time) of overbid percentages produces a flat line from the first sale through 1982. Thus, the overbid is an inherent part of the sealed bid process--it is ubiquitous.
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