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

Author

Listed:
  • 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)

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.

Suggested Citation

  • Anders Lunander & Jan-Eric Nilsson, 2003. "Taking the Lab to the Field: Experimental Tests of Alternative Mechanisms to Procure Multiple Contracts," Working Papers 2003.28, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2003.28
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    File URL: http://www.feem.it/userfiles/attach/Publication/NDL2003/NDL2003-028.pdf
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    References listed on IDEAS

    as
    1. John O. Ledyard & Mark Olson & David Porter & Joseph A. Swanson & David P. Torma, 2002. "The First Use of a Combined-Value Auction for Transportation Services," Interfaces, INFORMS, vol. 32(5), pages 4-12, October.
    2. Milgrom, Paul, 1998. "Game theory and the spectrum auctions," European Economic Review, Elsevier, vol. 42(3-5), pages 771-778, May.
    3. 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, September.
    Full references (including those not matched with items on IDEAS)

    Citations

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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.

    More about this item

    Keywords

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

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation

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