Holding an Auction for the Wrong Project

Alessandro De Chiara

MPRA Paper from University Library of Munich, Germany

Abstract: How does the probability of being involved in a renegotiation during the execution of a procurement contract affect the behavior of the interested contractors? What are its implications for the optimal contractual choice made by the buyer? We investigate these issues in a context characterized by uncertainty about the adequateness of the project initially specified by the buyer. We determine under which circumstances the buyer may find it profitable to hold an auction for a project design which ex-ante does not have the highest probability of being adequate.

Keywords: Asymmetric Auctions; Procurement; Renegotiation. (search for similar items in EconPapers)
JEL-codes: D44 D86 H57 (search for similar items in EconPapers)
Date: 2015-06-04, Revised 2015-04-21
New Economics Papers: this item is included in nep-mic, nep-net and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:72108

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