Probabilistic Procurement Auctions

Thomas Giebe and Paul Schweinzer

No 4320, CESifo Working Paper Series from CESifo

Abstract: We analyse procurement auctions in which sellers are distinguished on the basis of the ratios of quality per unit of money that they offer. Sellers are privately informed on the offered quality of the technology or good. We assume that the procurer cannot perfectly identify the best offer. Thus, with positive and decreasing probability, the second, third, etc. best ratio offered is selected as the winner of the auction. We model the decision process as based on a general noisy ranking of offers. We show that, although the problem seems to be analytically intractable in general, there exists a simple symmetric, pure-strategy equilibrium in which everyone follows the simple heuristic to match the same ‘focal’ price-quality ratio.

Keywords: auctions; contests; price-quality ratio; procurement; scoring (search for similar items in EconPapers)
JEL-codes: C70 D70 H57 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Probabilistic procurement auctions (2015)
Working Paper: Fuzzy Price-Quality Ratio Procurement under Incomplete Information (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_4320

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