Number Of Bidders Research Articles

Significant factors influencing the bid mark-up decision of infrastructure projects in Sri Lanka

Tender estimates play a vital role in achieving bid successes. A bid price which has an optimum mark-up is governed by many factors. The research aims to identify the significant factors influencing the bid mark-up decision of infrastructure projects in Sri Lanka. Using a literature review, semi-structured interviews and a questionnaire survey, the study identifies nine significant factors influencing the mark-up decision of infrastructure projects. The identified significant factors are ‘estimated direct cost’, ‘competitiveness of other bids’, ‘type of work’, ‘project duration’, ‘the ability to predict pre-tender estimate’, ‘project location’, ‘reliability of the company estimate’, ‘number of bidders’ and ‘need for work’, respectively. The study also reveals potential relationships between the identified significant factors and bid mark-up based on case studies. Amongst, ‘reliability of the company estimate’, ‘number of bidders’ and ‘type of work’ have shown positive relationships with mark-up. The contents should be of interest to bidders and researchers in construction.

Loss aversion and competition in Vickrey auctions: Money ain't no good

A key prediction of expectations-based reference-dependent preferences and loss aversion in second-price auctions with private values is that the number of bidders should affect bids in auctions for real objects but not in auctions with induced monetary values. In order to test this distinctive comparative statics prediction, we develop an experiment where subjects bid in multiple auctions for real objects as well as auctions with induced values, each time facing a different number of rivals. Our results are broadly consistent with expectations-based reference-dependent preferences and loss aversion. We find that in real-object auctions bids decline with the intensity of competition whereas in induced-value auctions, instead, bids do not vary with the intensity of competition. Our results suggest that bidders may behave differently in real-object auctions than in induced-value ones, casting some doubt on the extent to which findings from induced-value laboratory experiments can be transferred to the field.

Identification and estimation of risk aversion in first-price auctions with unobserved auction heterogeneity

This paper shows point-identification in first-price auctions with risk aversion and unobserved auction heterogeneity, by exploiting multiple bids per auction and variation in the number of bidders. If the exclusion restriction required for point-identification is violated, the recovered primitives are still valid bounds under weaker restrictions. We propose a Sieve Maximum Likelihood Estimator (SMLE). Monte Carlo experiments illustrate that the estimator performs well and that ignoring unobserved auction heterogeneity can bias risk aversion estimates. In an application to timber auctions we find that the bidders are risk-neutral, but we would reject risk-neutrality without accounting for unobserved auction heterogeneity.

조경관리 민간위탁용역의 입찰추이에 관한 연구†

Based on the bidding data of the national marketplace for public procurement service from 2003 to 2015, this study investigated and analyzed the bidding trends of the landscape management public consignment service by analyzing total bidding, type, client, region, license. The results are as follows. First, the total number of bids for civilian consignment services in landscape management increased by 1,112 cases, corresponding to a 487.7% increase over 10 years, and the total bidding amount increased by 144,504 million won, corresponding to a 382.5% increase. Second, in 10 years, the proportion of landscape management in landscaping works increased by 10%, and the bidding amount increased by 3%. Third, in the analysis of bidding trends by type, green areas showed the greatest growth in the number of bids, while the greenery of buildings showed the highest increase in the bid amount. Fourth, local autonomous entities, Gyeonggi province, and the landscaping planting construction industry showed the highest increase in the number of bids and the amount in each field such as client, region, and license. In summary, the number of cases and the bidding amount is increasing year by year. Considering the increasing number of users and demands thereof, the number of bids and the amount of consignment service for landscape management will continue to increase. The purpose of this study is to investigate and systematically analyze the tendency of bidding for 10 years for the private consignment service of landscape management in the current situation, where the importance of landscape management is increasingly emphasized. Another purpose of this study is to discern the necessity of the landscape management business and to provide the basis for incorporating the landscape management business into the professional construction industry in the future, thus providing opportunities for widening the expertise and diversity of the landscaping field. For the following study, the legal basis of landscape management, qualification, equipment standards, calculation of management cost per unit, and the appropriateness of the management cost should be considered.

The bidder exclusion effect

AbstractWe introduce a new, simple‐to‐compute test of independence of valuations and the number of bidders for ascending button auctions with symmetric, conditionally independent private values. The test involves estimating the expected revenue drop from excluding a bidder at random, which can be computed as a scaled sample average of a difference of order statistics. This object also provides a bound on counterfactual revenue changes from optimal reserve pricing or bidder mergers. We illustrate the approach using data from timber auctions, where we find some evidence that bidder valuations and the number of participants are not independent.

Can Input Market Imperfection Prevent Collusion in Product License Auction?

The paper considers a situation where government auctions a specific service provider license through sealed bid first price auction. There are at least three potential bidders in the market which differ in their willingness to pay for the license. The value of license to each firm is a private knowledge but all the values are drawn independently and identically from a common support which is a common knowledge. We model a two stage game. In stage 1, one of the bidders wins the auction and obtains the license. In stage 2, it purchases inputs required for producing the particular service which is then sold in the market. The paper shows that a firm always has the incentive to collude with the remaining bidders irrespective of whether the input market is perfect or imperfect. In the latter case the incentive diminishes in magnitude only. Lastly and contrasting to the popular perception, we show that presence of large number of bidders still provides an incentive to collude.

Determining reasonable bid ratios under two-sided power distribution assumption for public procurement under capped lowest-cost bidding system

This paper proposes a new definition of reasonable bid ratios - a ratio of bid price to published owner cost estimate - under the capped lowest-cost bidding system and provides a closed-form solution to determine the ratios for a given number of bidders. Bid ratios are assumed to be random, obeying two-sided power distribution (TSP). A reasonable bid ratio is found to decrease with increased number of bidders. The Monte Carlo simulations demonstrate that the computed reasonable bid ratios under the assumption of TSP distribution are proven to be very close to those under beta distribution and those from empirical data and are more accurate than those estimated from triangular distribution. Using Indonesian public procurement as a case study, this paper shows that reasonable bid ratios with uncertain numbers of bidders are lower than the traditional cut-off point. To make the proposed model operational, this paper also presents a simple protocol including the determination of minimum sample size required for TSP approximation. This paper concludes with model limitations and directions for future research.

Determining reasonable bid ratios under two-sided power distribution assumption for public procurement under capped lowest-cost bidding system

This paper proposes a new definition of reasonable bid ratios - a ratio of bid price to published owner cost estimate - under the capped lowest-cost bidding system and provides a closed-form solution to determine the ratios for a given number of bidders. Bid ratios are assumed to be random, obeying two-sided power distribution (TSP). A reasonable bid ratio is found to decrease with increased number of bidders. The Monte Carlo simulations demonstrate that the computed reasonable bid ratios under the assumption of TSP distribution are proven to be very close to those under beta distribution and those from empirical data and are more accurate than those estimated from triangular distribution. Using Indonesian public procurement as a case study, this paper shows that reasonable bid ratios with uncertain numbers of bidders are lower than the traditional cut-off point. To make the proposed model operational, this paper also presents a simple protocol including the determination of minimum sample size required for TSP approximation. This paper concludes with model limitations and directions for future research.

Auction for Access Points Reservation in Reserved Areas: Theoretical and Experimental Research

Работа посвящена разработке эффективного механизма взаимодействия заповедников с туроператорами, который позволяет находить финансирование для приоритетных проектов, а также привлекать на рынок новых участников и создавать новые туристические продукты для потенциальных клиентов. Существующая схема распределения, препятствующая входу на рынок новичков, не позволяет раскрыть потенциал экологического и познавательного туризма. Предложенный механизм, главной составляющей которого является аукцион мест доступа, решает проблему неэффективности. В то же время, нерациональное поведение экономических агентов может нивелировать общественный выигрыш от аукциона. Пилотная серия экспериментов, проведенных как на студентах-экономистах, так и с участием представителей заповедника и туристических компаний, позволила оценить глубину возникающей неэффективности и скорость обучения участников. The paper dwells upon developing an effective mechanism of interaction between the reserved areas and tour operators which allows to raise funds for priority projects, to involve new participants into the market and to create new tourism products for potential clients. The existing scheme of access points arrangement, hampering the new entrants, doesn’t allow to realize the potential of ecological and educational tourism. The proposed mechanism, the principal element of which is the auction for the access points reservation, eliminates entry barriers, helps to redistribute quotas effectively, to raise money for the most important projects and investigations, and in general to solve the problem of inefficiency. In particular, the reserved areas always have portfolios of tourism, environmental and scientific projects. At the same time the lack of the budget funding doesn’t allow them to realize all of those projects. Besides, there is no reasonable experience of involving business into such issues solution. The proposed mechanism allows the reserved areas to get funds from tour operators even for noncommercial projects. The firms supporting any of the projects financially (one or several, wholly or partly) become the partners of the reserved area. This is of interest for the partners not only for the purposes of advertising themselves or for improving their reputation. Tour operators get the whole amount of the transferred money (and in some cases even some additional bonus) to their virtual accounts. They can spend these funds to buy permits for serving tourists on the top-requested routes. The reserved areas offer some access points to be arranged (in the future all of them) by the auction. If a tour operator would like to enter the market or increase the number of available permits, it makes bids in the format (p, q), i.e. the price and the corresponding number of tourists whom it is ready to serve at this price. The number of bids is unlimited. After the time expiration the access points are arranged by the multi-auction at the (n+1)-price (multi-version of the Vickrey auction). Access points are granted to the companies that have made the maximum bids. It is possible to establish (by the decreasing coefficients) priorities in favor of certain companies, for example, long-term partners of the reserved areas, local tour operators, etc. This, in particular, can reduce skepticism regarding the transition to a new model of interaction between tour operators and the reserved areas. At the same time any other companies also have the opportunity to enter the market and receive the desired permits. As for the important features of the auction format, determining its choice as the proposed mechanism, we can mention, that the auction shows the market price. This format allows to determine the real wish of the firm to pay for the tourism activities in the reserved areas. Indeed, it is at the Vickrey auction where each bidder could demonstrate its real demand. In addition, what is especially important for this format is a large number of permits and tour operators participating in the auction and that helps to solve the traditional issues of participants’ collusion and possible auctioneer opportunism. At the same time the agents irrational behavior can eliminate social effects of the auction. The pilot series of experiments performed involving students-economists as well as the representatives of the reserved areas and tourist companies allowed estimating the arising inefficiency and the learning rate. After updating the proposed mechanism is planned to be applied on the electronic platform of the recreational and tourist services developed at the FEFU together with the staff of the Kronotsky Biosphere Reserve. Upon successful testing, it can be adapted and applied in other protected areas.

Common Values, Unobserved Heterogeneity, and Endogenous Entry in U.S. Offshore Oil Lease Auctions

In a environment, some market participants have private information relevant to others' assessments of their own valuations or costs. Economic theory shows that this type of informational asymmetry can have important implications for market performance and market design. Yet even for the classic example of an oil lease auction, formal evidence on the presence and strength of common values has been limited by the problem of auction-level unobserved heterogeneity that is likely to affect both participation in an auction and bidders' willingness to pay. Here we develop an empirical approach for first-price sealed bid auctions with affiliated values, unobserved heterogeneity, and endogenous bidder entry. We show that important features of the model are nonparametrically identified and apply a semiparametric estimation approach to data from U.S. offshore oil and gas lease auctions. Our empirical results show that common values, affiliated private information, and unobserved heterogeneity - three distinct phenomena with different implications for policy and empirical work - are all present. Failing to account for unobserved heterogeneity obscures the empirical evidence of common values. We examine the implications of our estimates for the classic revenue ranking of sealed bid auction designs, and for the interaction between affiliation, the winner's curse, and the number of bidders in determining the aggressiveness of bidding and seller revenue.

Rules, Discretion, and Corruption in Procurement: Evidence from Italian Government Contracting

The benefits of bureaucratic discretion depend on the extent to which it is used for public benefit versus exploited for private gain. We study the relationship between discretion and corruption in Italian government procurement auctions, using a confidential database of firms and procurement officials investigated for corruption by Italian enforcement authorities. Based on a regression discontinuity design around thresholds for discretion, we find that, overall, a large increase in the use of discretionary procedures in the 2000s led to a minimal increase in auctions won by investigated firms. By further investigating the attributes of corrupted auctions, we uncover two main factors that drive this non-result. First, discretionary procedure auctions are associated with corruption only when conducted with fewer than the formally required number of bidders or employing discretionary criteria (scoring rule rather than first price), which comprise a small fraction of discretionary auctions overall. We further show that, while these corruptible discretionary auctions are chosen more often by officials who are themselves investigated for corruption, they are used less often in procurement administrations in which at least one official is investigated for corruption. These findings fit with a framework in which more discretion leads to greater efficiency as well as more opportunities for theft, and a central monitor manages this trade-off by limiting discretion for high-corruption procedures and locales. Additional results based on two standard tools for curbing corruption - turnover and subcontracting limits - corroborate this interpretation. Overall, our results imply that discretion is under-utilized, given the high potential benefits as compared to the modest increment in corruption.

Robust Reserve Pricing in Auctions Under Mean Constraints

We study a seller who sets a reserve price in a second price auction with uncertainty over the joint distribution of bidders' valuations. The seller only knows the mean of the marginal distribution of each bidder's valuation and the range, and an adversarial Nature chooses the worst-case distribution within this ambiguity set. We use a dual characterization to solve for this distribution. We find that the seller's optimal reserve price tends to be low and converges to zero in probability as the number of bidders increases.

Effect of Public Procurement Regulation on Competition and Cost-Effectiveness

This study empirically investigates the impact of public procurement regulation quality on the competition for tenders and the cost-effectiveness of awarded contracts, by employing the World Bank’s Benchmarking Public Procurement and EuroPAM Public Procurement quality scores. Using extensive data on public procurement in the European Economic Area, Switzerland, and Macedonia, the analysis in this paper shows that higher quality public procurement regulatory regimes are associated with higher levels of competition and cost-effectiveness. Improved regulation quality significantly increases the number of bidders and the probability that the procurement price is lower than the estimated cost.

Information disclosure in optimal auctions

This paper analyzes a situation in which the seller controls the accuracy of what potential buyers learn about their valuation of a good to be sold. This setting is related to many real situations such as home sales, antique auctions, and digital platforms such as Google and Facebook selling online advertising slots. Two important questions arise: what is the optimal selling mechanism, and what is the optimal disclosure policy of the seller. Under the assumption of private values, a simple auction with a reserve price is the optimal mechanism. What we show is that the amount of (costly) information provided increases with the number of potential bidders when using the optimal mechanism and is greater than when the object is always sold. Because information changes the distribution of a bidder’s expected valuations, the optimal reserve price also changes, so that the number of bidders (indirectly) affects the reserve price. We show that as the number of bidders increases, the optimal reserve price becomes more restrictive.

All-pay auctions with affiliated binary signals

We analyze all-pay auctions with affiliated values and binary signals. We analyze the unique symmetric equilibrium with any number of bidders and show that the bidders earn positive rents only if the equilibrium is monotone. We also characterize the symmetric equilibrium of the closely related two-player war of attrition.We compare expected revenues across these formats. All-pay auctions result in lower expected rents to the bidders than standard auctions, but they also induce inefficient allocations in some models with affiliated private values. With two bidders, the effect on rent extraction dominates, and the all-pay auctions outperform standard auctions in terms of expected revenue. With many bidders, standard auctions may result in higher expected revenue. The war of attrition outperforms the standard auctions in terms of revenue, but its ranking relative to all-pay auctions is ambiguous.

Learning to Set the Reserve Price Optimally in Laboratory First Price Auctions

We analyze choices of sellers, each setting a reserve price in a laboratory first price auction with automated equilibrium bidding. Subjects are allowed to gain experience for a fixed period of time prior to making a single payoff-relevant choice. Behavior of more experienced sellers was consistent with benchmark theory: average reserve price for these sellers was independent of the number of bidders and equaled the predicted level. Less experienced sellers however deviated from the theoretical benchmark: on average, they tended to shade reserve price below the predicted level and positively relate it to the number of bidders.

Optimal bidder participation in public procurement auctions

This paper empirically identifies the optimal number of bidders to achieve the lowest procurement prices in public procurement auctions. We examine a unique data set that covers all Turkish government procurement auctions comprising more than half a million observations for the period 2005–2012. We present a novel and easy-to-implement method to investigate the number of bidders required for the public procurement markets to be competitive. Our results suggest that procurement costs decrease until six to eight bidders. Policy makers can employ the method to investigate the optimal number of bidders and design policies to promote competition. Moreover, policy makers can also make use of the optimal numbers as focal points to inspect whether competitive efficiency is achieved in public procurement auctions.

A Study on the Clustering of Bidding Company Trends Using Machine Learning Based G2B Data

KONEPS is the National Comprehensive Electronic Procurement System of the Public Procurement Service. If KONEPS can know the bidding possibility and trend before bidding, it will be more efficient for companies to bid. In this paper, we used in the experiment was the data of "Progress Bidding Classification" of the Procurement Information Open Portal. And preprocessing process was performed to facilitate prediction model learning. Prior to learning, preprocessed 1,158 data sets were normalized to match the range of data or to make the distribution similar. After normalization we select the number of cluster. As a result of K-Means Clustering, Biddropping is 77 ~ 80%, Budget Allocated is about 2 billion Won(₩), Biddropping is 83 ~ 87%, Budget Allocated is about 1 billion won, bid dropping is 87 ~ 90% Budget Allocated is distributed around 500 million won. And can be confirmed that the cluster is divided based on the number of enterprise 58. Through the results, it is possible to study the tendering trends through the community by learning the prediction models of the bidder companies, the number of bidders, and the tendency of the bidding business, and it will help KONEPS to develop the next generation ISP.

The Effect of ID Verification in Online Markets: Evidence from a Field Experiment

eBay’s ID Verify program, which allowed sellers to pay a fee to have their identity confirmed by a credit information company, was designed to alleviate asymmetric information problems in online auctions. We conduct a field experiment where items are sold on eBay by one of four identities that either are or are not ID verified and have either a good or no reputation. We find that ID verification increases the number of bids placed but has no impact on the level of the winning bid, and may even lower the winning bid among sellers who have good reputations.

The Construction Industry and (Dis)Economies of Scope: Empirical Research in the Hokkaido Procurement Auction

This paper explores the presence, causes, and effects of economies of scope in the construction industry. Based on public procurement data of the Hokkaido Regional Development Bureau from fiscal years 2006 to 2012, it is clear that the cost efficiency of bid and win rates are regressed by different factors, including the number of segments in public procurement in which a construction business operates. We found that the bid rates of diversified firms are higher than those of specialised firms. Therefore, the probability of a firm to win a bid decreases as their number of operational segments increases. Diseconomies of scope in the construction industry stem from the degree of specialisation of each segmentation, which is tested in this study by a regression analysis between the average bid rate of each business and the number of bids. The results show that costs are reduced for jobs that receive many bids, especially from firms participating in few segments.