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Multi-dimensional procurement auction under uncertain and asymmetric information

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  • Papakonstantinou, Athanasios
  • Bogetoft, Peter

Abstract

This paper 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.

Suggested Citation

  • Papakonstantinou, Athanasios & Bogetoft, Peter, 2017. "Multi-dimensional procurement auction under uncertain and asymmetric information," European Journal of Operational Research, Elsevier, vol. 258(3), pages 1171-1180.
  • Handle: RePEc:eee:ejores:v:258:y:2017:i:3:p:1171-1180
    DOI: 10.1016/j.ejor.2016.09.060
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    Cited by:

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    2. Kerkhove, L.-P. & Vanhoucke, M., 2017. "A parallel multi-objective scatter search for optimising incentive contract design in projects," European Journal of Operational Research, Elsevier, vol. 261(3), pages 1066-1084.
    3. Marchant, T. & Mishra, D., 2018. "The characterization of affine maximizers on restricted domains with two alternatives," European Journal of Operational Research, Elsevier, vol. 266(3), pages 1038-1043.
    4. Qian, Cheng & Anderson, Edward, 2020. "Buyer’s optimal information revelation strategy in procurement auctions," European Journal of Operational Research, Elsevier, vol. 283(3), pages 1011-1025.
    5. Lorentziadis, Panos L., 2020. "Competitive bidding in asymmetric multidimensional public procurement," European Journal of Operational Research, Elsevier, vol. 282(1), pages 211-220.
    6. Qian, Xiaohu & Fang, Shu-Cherng & Huang, Min & Wang, Xingwei, 2019. "Winner determination of loss-averse buyers with incomplete information in multiattribute reverse auctions for clean energy device procurement," Energy, Elsevier, vol. 177(C), pages 276-292.
    7. Zhe Chen, 2021. "The bid orchestration and competitions in scoring procurement auctions," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(7), pages 1718-1729, October.
    8. Zhe Chen, 2021. "The multidimensional procurement auctions with reference‐based utility," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(2), pages 319-325, March.

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