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Basic Bidding Formats: Characteristics and Differences

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  • Fritz Helmedag

    (Department of Economics, Chemnitz University of Technology)

Abstract

In standard auction theory, the 'revenue equivalence theorem' asserts that the outcomes of the elementary allocation methods coincide. However, bidding processes differ fundamentally with regard to the decision situation of the participants: Is it at all imperative to take into consideration the number of competitors ('stochastic' strategy) or not ('deterministic' course of action)? Furthermore, established auction theory neglects the operating modes of procurement alternatives under uncertainty. Apart from the lacking knowledge how many rivals have to be beaten, tenderers regularly are ignorant of the buyer's reserve price. Then it is even more tentative to calculate an offer based on probability theory. Consequently, the suppliers' propensity to collude increases.

Suggested Citation

  • Fritz Helmedag, 2021. "Basic Bidding Formats: Characteristics and Differences," Chemnitz Economic Papers 051, Department of Economics, Chemnitz University of Technology, revised Oct 2021.
    • Handle: RePEc:tch:wpaper:cep051
    as

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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Auctions; Tendering; Strategic Bidding;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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    This paper has been announced in the following NEP Reports:

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