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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

    (Swedish National Road and Transport Research Institute and Department of Economics, Örebro University)

  • Jan-Eric Nilsson

    (Swedish National Road and Transport Research Institute and Department of Economics, Dalarna University)

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    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.

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    File URL: http://www.feem.it/userfiles/attach/Publication/NDL2003/NDL2003-028.pdf
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    Bibliographic Info

    Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2003.28.

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    Date of creation: Mar 2003
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    Handle: RePEc:fem:femwpa:2003.28

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    Related research

    Keywords: Multiple units; non-constant costs; asymmetric redemption values; alternative procurement mechanisms;

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    References

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    1. John O. Ledyard & David Porter & Antonio Rangel, 1997. "Experiments Testing Multiobject Allocation Mechanisms," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(3), pages 639-675, 09.
    2. Milgrom, Paul, 1998. "Game theory and the spectrum auctions," European Economic Review, Elsevier, vol. 42(3-5), pages 771-778, May.
    3. Ledyard, John O. & Olson, Mark & Porter, David & Swanson, Joseph A. & Torma, David P., 2000. "The First Use of a Combined Value Auction for Transportation Services," Working Papers 1093, California Institute of Technology, Division of the Humanities and Social Sciences.
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    Cited by:
    1. Hultkrantz, Lars, 2005. "A review of universal-service policy," Working Papers 2005:5, Örebro University, School of Business.

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