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Taking the Lab to the Field: Experimental Tests of Alternative Mechanisms to Procure Multiple Contracts

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Author Info
Anders Lunander ()
Jan-Eric Nilsson ()
Abstract

The first part of the paper reports the results from a sequence of laboratory experiments comparing the bidding behavior for multiple contracts in three different sealed bid auction mechanisms; first-price simultaneous, first-price sequential and first-price combinatorial bidding. The design of the experiment is based on experiences from a public procurement auction of road markings in Sweden. Bidders are asymmetric in their cost functions; some exhibit decreasing average costs of winning more than one contract, whereas other bidders have increasing average cost functions. The combinatorial bidding mechanism is demonstrated to be most efficient. The second part of the paper describes how the lab experiment was followed up by a field test of a combinatorial procurement auction of road markings. Copyright Kluwer Academic Publishers 2004

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File URL: http://hdl.handle.net/10.1023/B:REGE.0000008654.68169.08
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Publisher Info
Article provided by Springer in its journal Journal of Regulatory Economics.

Volume (Year): 25 (2004)
Issue (Month): 1 (January)
Pages: 39-58
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Handle: RePEc:kap:regeco:v:25:y:2004:i:1:p:39-58

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Related research
Keywords: multiple units; non-constant costs; asymmetric redemption values; alternative procurement mechanisms;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Peter Cramton, 1997. "The FCC Spectrum Auctions: An Early Assessment," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 6(3), pages 431-495, 09. [Downloadable!] (restricted)
    Other versions:
  2. Katzman, Brett, 1999. "A Two Stage Sequential Auction with Multi-Unit Demands," Journal of Economic Theory, Elsevier, vol. 86(1), pages 77-99, May. [Downloadable!] (restricted)
  3. Cramton, Peter & Schwartz, Jesse A, 2000. "Collusive Bidding: Lessons from the FCC Spectrum Auctions," Journal of Regulatory Economics, Springer, vol. 17(3), pages 229-52, May. [Downloadable!] (restricted)
    Other versions:
  4. Branco, Fernando, 2001. "On the superiority of the multiple round ascending bid auction," Economics Letters, Elsevier, vol. 70(2), pages 187-194, February. [Downloadable!] (restricted)
  5. Armstrong, Mark, 2000. "Optimal Multi-object Auctions," Review of Economic Studies, Blackwell Publishing, vol. 67(3), pages 455-81, July.
  6. Marshall Robert C. & Meurer Michael J. & Richard Jean-Francois & Stromquist Walter, 1994. "Numerical Analysis of Asymmetric First Price Auctions," Games and Economic Behavior, Elsevier, vol. 7(2), pages 193-220, September. [Downloadable!] (restricted)
  7. Avery, Christopher & Hendershott, Terrence, 2000. "Bundling and Optimal Auctions of Multiple Products," Review of Economic Studies, Blackwell Publishing, vol. 67(3), pages 483-97, July.
  8. David P. Porter, 1999. "The effect of bid withdrawal in a multi-object auction," Review of Economic Design, Springer, vol. 4(1), pages 73-97. [Downloadable!] (restricted)
  9. Bykowsky, Mark M & Cull, Robert J & Ledyard, John O, 2000. "Mutually Destructive Bidding: The FCC Auction Design Problem," Journal of Regulatory Economics, Springer, vol. 17(3), pages 205-28, May. [Downloadable!] (restricted)
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  10. Branco, Fernando, 1997. "Sequential auctions with synergies: An example," Economics Letters, Elsevier, vol. 54(2), pages 159-163, February. [Downloadable!] (restricted)
  11. Gale, Ian, 1990. "A multiple-object auction with superadditive values," Economics Letters, Elsevier, vol. 34(4), pages 323-328, December. [Downloadable!] (restricted)
  12. Rosenthal, Robert W. & Wang, Ruqu, 1996. "Simultaneous Auctions with Synergies and Common Values," Games and Economic Behavior, Elsevier, vol. 17(1), pages 32-55, November. [Downloadable!] (restricted)
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  13. von Ungern-Sternberg, Thomas, 1991. "Swiss Auctions," Economica, London School of Economics and Political Science, vol. 58(231), pages 341-57, August. [Downloadable!] (restricted)
  14. Marc S. Robinson, 1985. "Collusion and the Choice of Auction," RAND Journal of Economics, The RAND Corporation, vol. 16(1), pages 141-145, Spring. [Downloadable!] (restricted)
  15. John O. Ledyard & David Porter & Antonio Rangel, 1997. "Experiments Testing Multiobject Allocation Mechanisms," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 6(3), pages 639-675, 09. [Downloadable!] (restricted)
  16. Krishna, Vijay & Rosenthal, Robert W., 1996. "Simultaneous Auctions with Synergies," Games and Economic Behavior, Elsevier, vol. 17(1), pages 1-31, November. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Dakshina G. De Silva & Anuruddha Kankanamge & Georgia Kosmopoulou, 2005. "The Impact Of Change In Auction Format On Bidding Behavior," Microeconomics 0512009, EconWPA. [Downloadable!]
  2. Lunander, Anders & Lundberg, Sofia, 2009. "Do Combinatorial Procurement Auctions Lower Cost? - An Empirical Analysis of Public Procurement of Multiple Contracts," UmeÃ¥ Economic Studies 776, Umeå University, Department of Economics, revised 16 Sep 2009. [Downloadable!]
  3. Katerina Sherstyuk, 2009. "A comparison of first price multi-object auctions," Experimental Economics, Springer, vol. 12(1), pages 42-64, March. [Downloadable!] (restricted)
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