Rational bidding in a procurement auction with subjective evaluations

Mridu Prabal Goswami and David Wettstein ()

International Journal of Industrial Organization, 2016, vol. 44, issue C, 60-67

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: Procurement auctions; Subjectivity; Favoritism (search for similar items in EconPapers)
JEL-codes: D44 D89 H57 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:44:y:2016:i:c:p:60-67

DOI: 10.1016/j.ijindorg.2015.10.001

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