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Robust procurement design

Author

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  • Debasis Mishra
  • Sanket Patil
  • Alessandro Pavan

Abstract

We study procurement design when the buyer is uncertain about both the value of the good and the seller's cost. The buyer has a conjectured model but does not fully trust it. She first identifies mechanisms that maximize her worst-case payoff over a set of plausible models, and then selects one from this set that maximizes her expected payoff under the conjectured model. Robustness leads the buyer to increase procurement from the least efficient sellers and reduce it from those with intermediate costs. We also study monopoly regulation and identify conditions under which quantity regulation outperforms price regulation.

Suggested Citation

  • Debasis Mishra & Sanket Patil & Alessandro Pavan, 2025. "Robust procurement design," Papers 2512.08177, arXiv.org.
    • Handle: RePEc:arx:papers:2512.08177
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    File URL: http://arxiv.org/pdf/2512.08177
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