Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/77684 
Year of Publication: 
2013
Series/Report no.: 
CESifo Working Paper No. 4320
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We analyse procurement auctions in which sellers are distinguished on the basis of the ratios of quality per unit of money that they offer. Sellers are privately informed on the offered quality of the technology or good. We assume that the procurer cannot perfectly identify the best offer. Thus, with positive and decreasing probability, the second, third, etc. best ratio offered is selected as the winner of the auction. We model the decision process as based on a general noisy ranking of offers. We show that, although the problem seems to be analytically intractable in general, there exists a simple symmetric, pure-strategy equilibrium in which everyone follows the simple heuristic to match the same focal' price-quality ratio.
Subjects: 
auctions
contests
price-quality ratio
procurement
scoring
JEL: 
C70
D70
H57
Document Type: 
Working Paper
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