Multi-dimensional procurement auction under uncertain and asymmetric information

Athanasios Papakonstantinou, Peter Bogetoft

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Abstract

This article addresses two important issues in public procurement: ex ante uncertainty about the participating agents’ qualities and costs and their strategic behaviour. We present a novel multi-dimensional auction that incentivises agents to make a partial inquiry into the procured task and to honestly report quality-cost probabilistic estimates based on which the principal can choose the agent that offers the best value for money. The mechanism extends second score auction design to settings where the quality is uncertain and it provides incentives to both collect information and deliver desired qualities.
Original languageEnglish
JournalEuropean Journal of Operational Research
Volume258
Issue number3
Pages (from-to)1171–1180
Number of pages31
ISSN0377-2217
DOIs
Publication statusPublished - 2017

Keywords

  • Auctions/bidding
  • Information asymmetry
  • Uncertainty modelling
  • Quality and cost uncertainty
  • Strictly proper scoring rules

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