Rational bidding in a procurement auction with subjective evaluations

Mridu Prabal Goswami; David Wettstein

doi:10.1016/j.ijindorg.2015.10.001

Rational bidding in a procurement auction with subjective evaluations

Mridu Prabal Goswami, David Wettstein

Department of Economics

Research output: Contribution to journal › Article › peer-review

2 Scopus citations

Abstract

In practice, procurement auctions often involve subjective evaluations of bids, especially when consisting of quality or design parameters which are hard to quantify. We formally define a notion of subjectivity in an auction environment and analyze the implications for rational bidding behavior. Our findings explain some observed bidding behaviors that are inconsistent with standard equilibrium predictions. Finally we examine the way subjectivity facilitates the practice of favoritism on part of the auctioneer.

Original language	English
Pages (from-to)	60-67
Number of pages	8
Journal	International Journal of Industrial Organization
Volume	44
DOIs	https://doi.org/10.1016/j.ijindorg.2015.10.001
State	Published - 1 Jan 2016

Keywords

Favoritism
Procurement auctions
Subjectivity

ASJC Scopus subject areas

Industrial relations
Aerospace Engineering
Economics and Econometrics
Economics, Econometrics and Finance (miscellaneous)
Strategy and Management
Industrial and Manufacturing Engineering

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10.1016/j.ijindorg.2015.10.001

Cite this

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title = "Rational bidding in a procurement auction with subjective evaluations",

abstract = "In practice, procurement auctions often involve subjective evaluations of bids, especially when consisting of quality or design parameters which are hard to quantify. We formally define a notion of subjectivity in an auction environment and analyze the implications for rational bidding behavior. Our findings explain some observed bidding behaviors that are inconsistent with standard equilibrium predictions. Finally we examine the way subjectivity facilitates the practice of favoritism on part of the auctioneer.",

keywords = "Favoritism, Procurement auctions, Subjectivity",

author = "Goswami, {Mridu Prabal} and David Wettstein",

note = "Funding Information: We thank Ori Haimanko, Anirban Kar, Dipjyoti Majumdar, Debasis Mishra, Manipushpak Mitra, Aner Sela, Arunava Sen, Tridib Sharma, Chandramohan S., Kumarjit Saha, John Weymark, James Schummer, Sonal Yadav, the editor and two reviewers for their insightful comments. We gratefully acknowledge the financial support of the Israel Council for Higher Education for a PBC fellowship and the Israeli Science Foundation (grant no. 1210/12 ). Publisher Copyright: {\textcopyright} 2015 Elsevier B.V.",

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doi = "10.1016/j.ijindorg.2015.10.001",

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AU - Wettstein, David

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PY - 2016/1/1

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N2 - In practice, procurement auctions often involve subjective evaluations of bids, especially when consisting of quality or design parameters which are hard to quantify. We formally define a notion of subjectivity in an auction environment and analyze the implications for rational bidding behavior. Our findings explain some observed bidding behaviors that are inconsistent with standard equilibrium predictions. Finally we examine the way subjectivity facilitates the practice of favoritism on part of the auctioneer.

AB - In practice, procurement auctions often involve subjective evaluations of bids, especially when consisting of quality or design parameters which are hard to quantify. We formally define a notion of subjectivity in an auction environment and analyze the implications for rational bidding behavior. Our findings explain some observed bidding behaviors that are inconsistent with standard equilibrium predictions. Finally we examine the way subjectivity facilitates the practice of favoritism on part of the auctioneer.

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KW - Subjectivity

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JO - International Journal of Industrial Organization

JF - International Journal of Industrial Organization

ER -

Rational bidding in a procurement auction with subjective evaluations

Abstract

Keywords

ASJC Scopus subject areas

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