Efficiency and information aggregation in large uniform-price auctions

Bodoh-Creed, Aaron

doi:10.1016/j.jet.2013.09.012

Cited by 19 publications

(6 citation statements)

References 29 publications

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“…Moreover, with an increased work content, the auctioneer allows bidders more time to bid (Blume & Heidhues, ). That has also an effect on the number of bidders and the winning bid price, as the bidders have more time to share their views and opinions with each other and form a cartel (Che & Kim, ; De Silva et al., ; Grover et al., ; Bodoh‐Creed, ). Therefore, the auctioneer (i.e., the government department) should design a number of auction parameter values (such as work content, allowable profit margin, and bid period) to reduce the effect of collusion on the winning bid price‐to‐reserve price ratios.…”

Section: Collusion Reduction Mechanismsmentioning

confidence: 99%

“…Following Blume and Heidhues (), Grover et al. (), Marshall and Marx (), and Bodoh‐Creed, () we assume that when the government sets a high bidding period, the contractors have more time to share their views and opinions among the other potential contractors and a large number of cartels is formed.…”

Section: The Causal Model For Procurement Auctionsmentioning

confidence: 99%

“…In response to the main causes of collusion, the literature has proposed a variety of collusion prevention mechanisms, among which are supervisor monitoring (Tirole, 1992), yardstick competition (Tangerås, 2002), incentivizing auctioneers to avoid bid-rigging (Lengwiler & Wolfstetter, 2010), novel auction mechanisms (Padhi & Mohapatra, 2010;Rosen & Madlener, 2013), controlled release of information (Bodoh-Creed, 2013;Che & Kim, 2009;De Silva et al, 2009;Grover et al, 2006), adoption of online tendering and procurement auctions (Costa & Tavares, 2013), splitting of work content (Al-Arjani, 2002;Anton, Brusco, & Lopomo, 2010;Gong, Li, & McAfee, 2012), preference for global bidders (Bajari & Summers, 2002), introducing a participation fee and reserve price (Chowdhury, 2008;Kirkegaard, 2005;Rego, 2013;Saini, 2010), pre-auction screening of phantom bidders to prevent very high and very low bids (Ballesteros-Pérez et al, 2013), and post auction negotiation to control cost overruns (Bucciol et al, 2013).…”

Section: Collusion Reduction Mechanismsmentioning

confidence: 99%

See 2 more Smart Citations

Design of Auction Parameters to Reduce the Effect of Collusion

Padhi

Wagner²,

Mohapatra

2015

Decision Sciences

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Government departments are increasingly turning to auctions to procure goods and services. Collusion among bidders, however, reduces competition and raises winning bid prices. Since conventional collusion control measures based on the redesign of auction mechanisms are less effective in government procurement auctions, there is a need to devise control measures that decrease the effect of collusion. This article demonstrates how the principles of design of experiments can be applied in a system dynamics model to find the auction parameter values that substantially reduce the effect of collusion in government procurement auctions. This research makes a number of contributions. First, it develops a feedback-based dynamic mechanism of collusion in government procurement auctions. The mechanism proposes the winning bid price as being determined not by the total number of bidders but by the number of independent bidders. It defines each cartel as one independent bidder regardless of the number of bidders in the cartel. Second, the mechanism is tested by developing a system dynamics model to government auctions for procuring contracts for roadwork projects in India. Third, the principles of experimental design are applied to find the auction parameter values that ensure high bid participation and low winning price-to-reserve price ratios.

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Section: Collusion Reduction Mechanismsmentioning

confidence: 99%

Section: The Causal Model For Procurement Auctionsmentioning

confidence: 99%

Section: Collusion Reduction Mechanismsmentioning

confidence: 99%

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Design of Auction Parameters to Reduce the Effect of Collusion

Padhi

Wagner²,

Mohapatra

2015

Decision Sciences

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“…To argue that limit outcomes indeed map out the aggregate behavior of large enough committees, we show that: (1) The decision probabilities associated to any sequence of equilibria of finite games must converge to the set of limit outcomes, and (2) generically, given a limit outcome, one can construct a sequence of equilibria of the finite games such that its associated sequence of conditional decision probabilities converges to that limit outcome. This approach is closely related to the method, used in other areas of game theory (see Bodoh-Creed (2013), Bodoh-Creed et.al. (2016), of defining and solving an often more tractable game with infinitely many players in order to understand equilibrium behavior in games with a large number of players, first carefully arguing that the equilibria of the artificial game are arbitrarily good approximations of the equilibria of the finite games for a sufficiently large number of players.…”

Section: Introductionmentioning

confidence: 99%

Robust Information Aggregation Through Voting

2019

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Numerous theoretical studies have shown that information aggregation through voting is fragile. We consider a model of information aggregation with vote-contingent payoffs and generically characterize voting behavior in large committees. We use this characterization to identify the set of vote-contingent payoffs that lead to a unique outcome that robustly aggregates information. Generally, it is not sufficient to simply reward agents for matching their vote to the true state of the world. Instead, robust and unique information aggregation can be achieved with vote-contingent payoffs whose size varies depending on which option the committee chooses, and whether the committee decision is correct.

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“…So, can we design a divisible goods auction mechanism to allocate CEPs? Nowadays, divisible-goods mechanisms are widely used in the practical allocation of many divisible goods and resources, such as stocks, treasury bills, network bandwidth, land, and electric power (Back and Zender, 1993; Bodoh-Creed, 2013; Chen and Chen, 2005; Lengwiler, 1999; Pham et al., 2015; Wang and Zender, 2003; Wilson, 1979). It has become one of the most active research fields in the auction theory.…”

Section: Introductionmentioning

confidence: 99%

Innovative allocation mechanism design of carbon emission permits in China under the background of a low-carbon economy

Rao

2015

Environ Plann B Plann Des

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The total quantity control and trading of carbon emission permits (CEPs) are important means to promote the development of a low-carbon economy, and the key is the initial allocation of the CEPs. For the initial allocation problem of CEPs in China, we analyze the disadvantages of the existing free allocation method, namely, that it cannot stimulate the polluters to declare their real marginal-cost information and so it is difficult to achieve effectiveness in resource allocation. Considering these disadvantages, we design an incentive auction mechanism for allocating CEPs based on the theory and methods of a divisible-good auction, to achieve the optimal supply strategy of the government and the equilibrium bidding strategies of polluters. The theoretical proof shows that this auction mechanism has properties such as stimulation of information and validity of allocation.The auction mechanism is applied to the problem of CEP allocation in fourteen cities in the Hanjiang River Basin in China. From the allocation results of this application example, we make some suggestions for improving the implementation of the CEP trading system and the design of future environmental policy in a low-carbon economy.

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Efficiency and information aggregation in large uniform-price auctions

Cited by 19 publications

References 29 publications

Design of Auction Parameters to Reduce the Effect of Collusion

Design of Auction Parameters to Reduce the Effect of Collusion

Robust Information Aggregation Through Voting

Innovative allocation mechanism design of carbon emission permits in China under the background of a low-carbon economy

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