Rational bidding in a procurement auction with subjective evaluations

Mridu Prabal Goswami, David Wettstein

Research output: Contribution to journalArticlepeer-review

3 Scopus citations


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 languageEnglish
Pages (from-to)60-67
Number of pages8
JournalInternational Journal of Industrial Organization
StatePublished - 1 Jan 2016


  • 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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