Procurement with competing insiders

Matthew J. Robertson

Economics Letters, 2025, vol. 250, issue C

Abstract: The tournament auction is a novel approach to studying procurement in which a group of entrants compete for the chance to face a strong incumbent, or insider. I introduce competing insiders and risk aversion to this form of procurement auction and analyse how these factors affect optimal bidding behaviour. Increasing the number of strong insiders significantly decreases the degree of above-value bidding that is present with a single insider. In contrast, risk aversion increases above-value bidding relative to risk neutrality, but has a weaker effect than the number of insiders on bidding behaviour. Therefore, even with risk-averse bidders, bids eventually approach bidders’ values when the number of insiders grows large.

Keywords: Strong insiders; Tournament auction; Overbidding; Expected revenue; Procurement (search for similar items in EconPapers)
JEL-codes: C72 D44 D82 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165176525001260
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:250:y:2025:i:c:s0165176525001260

DOI: 10.1016/j.econlet.2025.112289

Access Statistics for this article

Economics Letters is currently edited by Economics Letters Editorial Office

More articles in Economics Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().