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The beauty of Dutch: Bidding behavior in combinatorial first-price procurement auctions
- Source :
- European Journal of Operational Research. 291:711-721
- Publication Year :
- 2021
- Publisher :
- Elsevier BV, 2021.
-
Abstract
- Ex-post split-award auctions are a frequently used form of combinatorial auction mechanism in practice. The procurement quantity is split into several shares and suppliers can submit bids on separate shares as well as on the entire quantity. Markets with diseconomies of scale are wide-spread, but strategically challenging. In a game-theoretical equilibrium analysis, Kokott et al. (2019) have recently shown that in contrast to single-object auctions, there is no strategic equivalence between first-price sealed-bid (FPSB) and Dutch combinatorial auctions. The FPSB auctions are characterized by efficient and inefficient equilibria while the Dutch auctions only possess efficient equilibria. We report the results of extensive laboratory experiments and show that the theory explains the bid data surprisingly well. Importantly, a compound Dutch auction format weakly outperforms the wide-spread combinatorial first-price sealed-bid auction in efficiency and total procurement costs. The results provide guidance for procurement managers in the field.
- Subjects :
- TheoryofComputation_MISCELLANEOUS
050210 logistics & transportation
021103 operations research
Information Systems and Management
General Computer Science
business.industry
05 social sciences
Dutch auction
Big data
0211 other engineering and technologies
TheoryofComputation_GENERAL
02 engineering and technology
Management Science and Operations Research
Bidding
Diseconomies of scale
Industrial and Manufacturing Engineering
Microeconomics
Combinatorial auction
Procurement
Modeling and Simulation
0502 economics and business
ComputingMilieux_COMPUTERSANDSOCIETY
Common value auction
Business
Equivalence (measure theory)
Subjects
Details
- ISSN :
- 03772217
- Volume :
- 291
- Database :
- OpenAIRE
- Journal :
- European Journal of Operational Research
- Accession number :
- edsair.doi...........e46e3f893b3becef1db2df6f9fa45130