Taking the Lab to the Field: Experimental Tests of Alternative Mechanisms to Procure Multiple Contracts
AbstractThe 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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Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2003.28.
Date of creation: Mar 2003
Date of revision:
Multiple units; non-constant costs; asymmetric redemption values; alternative procurement mechanisms;
Find related papers by JEL classification:
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
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- 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.
- Milgrom, Paul, 1998. "Game theory and the spectrum auctions," European Economic Review, Elsevier, vol. 42(3-5), pages 771-778, May.
- 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.
- Hultkrantz, Lars, 2005. "A review of universal-service policy," Working Papers 2005:5, Örebro University, School of Business.
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