A sealed-bid two-attribute yardstick auction without prior scoring

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Standard

A sealed-bid two-attribute yardstick auction without prior scoring. / Hougaard, Jens Leth; Nielsen, Kurt; Papakonstantinou, Athanasios.

In: Group Decision and Negotiation, Vol. 25, No. 4, 2016, p. 827-843.

Research output: Contribution to journal › Journal article › Research › peer-review

Harvard

Hougaard, JL, Nielsen, K & Papakonstantinou, A 2016, 'A sealed-bid two-attribute yardstick auction without prior scoring', Group Decision and Negotiation, vol. 25, no. 4, pp. 827-843. https://doi.org/10.1007/s10726-015-9463-5

APA

Hougaard, J. L., Nielsen, K., & Papakonstantinou, A. (2016). A sealed-bid two-attribute yardstick auction without prior scoring. Group Decision and Negotiation, 25(4), 827-843. https://doi.org/10.1007/s10726-015-9463-5

Vancouver

Hougaard JL, Nielsen K, Papakonstantinou A. A sealed-bid two-attribute yardstick auction without prior scoring. Group Decision and Negotiation. 2016;25(4):827-843. https://doi.org/10.1007/s10726-015-9463-5

Author

Hougaard, Jens Leth ; Nielsen, Kurt ; Papakonstantinou, Athanasios. / A sealed-bid two-attribute yardstick auction without prior scoring. In: Group Decision and Negotiation. 2016 ; Vol. 25, No. 4. pp. 827-843.

Bibtex

@article{4007d3999c3c4b28b3b5de58da96c6dd,
title = "A sealed-bid two-attribute yardstick auction without prior scoring",
abstract = "We analyze a two-attribute single item procurement auction that uses yardstick competition to settle prices. The auction simplifies the procurement process by reducing the principal{\textquoteright}s articulation of preferences to simply choosing the most preferred offer as if it was a market with posted prices. This is done simply by replacing the submitted sealed bids by yardstick bids, computed by a linear weighting of the other participants{\textquoteright} bids. We show that there is only one type of Nash equilibria where some agents may win the auction by submitting a zero price-bid. Using a simulation study we demonstrate that following this type of equilibrium behavior often leads to winner{\textquoteright}s curse. The simulations show that in auctions with more than 12 participants the chance of facing winner{\textquoteright}s curse is around 95 %. Truthful reporting, on the other hand, does not constitute a Nash equilibrium but it is ex post individually rational. Using a simulation study we demonstrate that truthful bidding may indeed represent some kind of focal point.",
author = "Hougaard, {Jens Leth} and Kurt Nielsen and Athanasios Papakonstantinou",
year = "2016",
doi = "10.1007/s10726-015-9463-5",
language = "English",
volume = "25",
pages = "827--843",
journal = "Group Decision and Negotiation",
issn = "0926-2644",
publisher = "Springer",
number = "4",

}

RIS

TY - JOUR

T1 - A sealed-bid two-attribute yardstick auction without prior scoring

AU - Hougaard, Jens Leth

AU - Nielsen, Kurt

AU - Papakonstantinou, Athanasios

PY - 2016

Y1 - 2016

N2 - We analyze a two-attribute single item procurement auction that uses yardstick competition to settle prices. The auction simplifies the procurement process by reducing the principal’s articulation of preferences to simply choosing the most preferred offer as if it was a market with posted prices. This is done simply by replacing the submitted sealed bids by yardstick bids, computed by a linear weighting of the other participants’ bids. We show that there is only one type of Nash equilibria where some agents may win the auction by submitting a zero price-bid. Using a simulation study we demonstrate that following this type of equilibrium behavior often leads to winner’s curse. The simulations show that in auctions with more than 12 participants the chance of facing winner’s curse is around 95 %. Truthful reporting, on the other hand, does not constitute a Nash equilibrium but it is ex post individually rational. Using a simulation study we demonstrate that truthful bidding may indeed represent some kind of focal point.

AB - We analyze a two-attribute single item procurement auction that uses yardstick competition to settle prices. The auction simplifies the procurement process by reducing the principal’s articulation of preferences to simply choosing the most preferred offer as if it was a market with posted prices. This is done simply by replacing the submitted sealed bids by yardstick bids, computed by a linear weighting of the other participants’ bids. We show that there is only one type of Nash equilibria where some agents may win the auction by submitting a zero price-bid. Using a simulation study we demonstrate that following this type of equilibrium behavior often leads to winner’s curse. The simulations show that in auctions with more than 12 participants the chance of facing winner’s curse is around 95 %. Truthful reporting, on the other hand, does not constitute a Nash equilibrium but it is ex post individually rational. Using a simulation study we demonstrate that truthful bidding may indeed represent some kind of focal point.

U2 - 10.1007/s10726-015-9463-5

DO - 10.1007/s10726-015-9463-5

M3 - Journal article

VL - 25

SP - 827

EP - 843

JO - Group Decision and Negotiation

JF - Group Decision and Negotiation

SN - 0926-2644

IS - 4

ER -

ID: 150340979