Will Procurement Officials be Biased to Disregard Procurement Rules in Favor of a Low-priced, Albeit Defective, Bid?

Dekel Omer () and Dotan Yoav ()
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Dekel Omer: Department of Law, College of Law and Business, Ramat-Gan, Israel
Dotan Yoav: Faculty of Law, Hebrew University, Jerusalem, Israel

Review of Law & Economics, 2018, vol. 14, issue 2, 30

Abstract: To what extent are professional decision-makers in the field of public procurement susceptible to cognitive biases? Recent research found a bias in favor of the lower bidder when ranking competing bids (Dekel and Schurr 2014, “Cognitive Biases in Government Procurement – an Experimental Study with Real Bid Evaluators,” 10(2) Review of Law and Economics 169–200). In the present research we examine this question regarding another stage of the public procurement process – the qualification stage. To this end, we conducted a series of experiments with the participation of procurement officials in situations that closely resemble their daily work. Our main finding is that even though procurement officials are susceptible to a cognitive bias when they have to score competing bids, they overcome that bias when asked to decide whether to qualify faulty or questionable bids. We cautiously ascribe this difference to the different types of decision-making involved, and suggest further explorations of these insights.

Keywords: public procurement; cognitive bias; behavioral economics; lower bid bias; competitive bidding (search for similar items in EconPapers)
JEL-codes: D44 D73 H57 K23 L51 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1515/rle-2016-0014

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