IDEAS home Printed from https://ideas.repec.org/a/inm/oropre/v23y1975i6p1072-1079.html
   My bibliography  Save this article

On Competitive Bidding

Author

Listed:
  • M. E. Oren

    (Mobil Oil Corporation, New York, New York)

  • A. C. Williams

    (Mobil Oil Corporation, New York, New York)

Abstract

This paper develops a model for describing some aspects of competitive bidding. The motivating purpose of the model was that of formally examining the hypothesis put forward by Capen, Clapp and Campbell: In a competitive oil and gas lease sale, or indeed in any bidding situation in which the ultimate value of the object to be won is subject to uncertainty, the highest bidder tends to be one who has overvalued the prize. As a result, any company tends to win tracts (or prizes) which it has overvalued and tends to lose those which it has undervalued. Therefore, even if the pre-sale value estimates, on the average, turn out to be correct for each of the tracts bid on, the estimates for those that are actually won will tend to prove to have been too high. The model developed not only supports the hypothesis as set forth, but also establishes its validity much more generally.

Suggested Citation

  • M. E. Oren & A. C. Williams, 1975. "On Competitive Bidding," Operations Research, INFORMS, vol. 23(6), pages 1072-1079, December.
    • Handle: RePEc:inm:oropre:v:23:y:1975:i:6:p:1072-1079
    DOI: 10.1287/opre.23.6.1072
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/opre.23.6.1072
    Download Restriction: no
    File URL: https://libkey.io/10.1287/opre.23.6.1072?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Terry, Ryan P. & McGee, Jeffrey E. & Kass, Malcolm J., 2018. "The not-so-free agent: Non-performance factors that contribute to free agent compensation premiums," Sport Management Review, Elsevier, vol. 21(2), pages 189-201.
    2. Dirk Alboth & Anat Lerner & Jonathan Shalev, 2001. "Profit Maximizing in Auctions of Public Goods," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 3(4), pages 501-525, October.
    3. Riley, John G & Samuelson, William F, 1981. "Optimal Auctions," American Economic Review, American Economic Association, vol. 71(3), pages 381-392, June.
    4. Florence Naegelen, 1986. "La malédiction du vainqueur dans les procédures d'appels d'offres," Revue Économique, Programme National Persée, vol. 37(4), pages 605-636.
    5. Sharma, Sunil & Sud, Mukesh, 2019. "Impact of regulatory framework on bidding behavior of firms: Policy implications for the oil & gas sector," Energy Policy, Elsevier, vol. 131(C), pages 33-42.
    6. ALBOTH, Dirk & LERNER, Anat & SHALEV, Jonathan, 1997. "Auctioning public goods to groups of aghents," LIDAM Discussion Papers CORE 1997077, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    7. Mordechai E. Schwarz, 2021. "Auctions with endogenous opting‐out fees and recursive winning procedures from the Talmud," International Journal of Economic Theory, The International Society for Economic Theory, vol. 17(4), pages 345-374, December.
    8. Jawad Abrache & Teodor Crainic & Michel Gendreau & Monia Rekik, 2007. "Combinatorial auctions," Annals of Operations Research, Springer, vol. 153(1), pages 131-164, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:oropre:v:23:y:1975:i:6:p:1072-1079. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.