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Non-Committed Procurement under Intricate Uncertainty

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  • Seungjin Han

Abstract

This paper studies asymmetric first-price menu auctions in the procurement environment where the buyer does not commit to a decision rule and asymmetric sellers have interdependent costs and statistically affiliated signals. Sellers compete in bidding a menu of contracts, where a contract specifies a vector of characteristics and a payment required from the buyer for delivering these characteristics. The buyer does not commit ex-ante to a decision rule but rather upon observing all the menus offered by sellers chooses the best contract. This paper establishes the existence of a continuum of separating monotone equilibria in this game bounded above by the jointly ex-post efficient outcome and below by the jointly interim efficient outcome. It shows that the jointly ex-post efficient equilibrium outcome is the only ex-post renegotiation proof outcome and it is also ex-ante robust to all continuation equilibria.

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File URL: http://socserv.mcmaster.ca/econ/rsrch/papers/archive/2010-03.pdf
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Bibliographic Info

Paper provided by McMaster University in its series Department of Economics Working Papers with number 2010-03.

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Length: 34 pages
Date of creation: Mar 2010
Date of revision: Mar 2013
Handle: RePEc:mcm:deptwp:2010-03

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Keywords: first-price menu auctions; procurement; interdependent values; monotone equilibria; joint ex-post efficiency; ex-post renegotiation-proofness; ex-ante robustness;

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