Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/290001 
Year of Publication: 
2022
Series/Report no.: 
IDB Working Paper Series No. IDB-WP-01364
Publisher: 
Inter-American Development Bank (IDB), Washington, DC
Abstract: 
We study the potential benefits of adding a lottery component to cut the main risks associated with standard negotiated and rule-based auction procurement procedures. We show that adopting a two stage approach in which bureaucrats first negotiate with a small number of bidders to assess their eligibility and, next, rely on a lottery to award the contract reduces corruption risks often observed in negotiated procedures. For rule-based procedures, we show that a "third-price lottery" in which the two highest bidders are selected with equal probability and the project is contracted at a price corresponding to the third highest bid can reduce limited liability, renegotiation, bid rigging and collusion risks.
Subjects: 
rules
discretion
procurement
lotteries
corruption
auctions
JEL: 
D44
D73
H57
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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