http://worldcat.org/entity/work/id/34895872

Probability Distributions of Cost and Sequential Bidding Procedures for Defense Procurement Contracts

This paper explores the use of probability distributions of cost in competitive bidding for government procurement contracts. An attempt is made to identify advantages and disadvantages of using probability distributions, both to the government and to the bidders. The behavioral incentives of all parties are also investigated. A sequential bidding procedure is designed that allows bidders to reveal less information, and the government to process less information, while still inducing honest bidding. The sequential procedure has the same winning bidder, with the same utility to the government and to the bidder, as a one-stage procedure requiring that the bidders furnish and the government evaluate much more information. The paper demonstrates the mathematical equivalence of the one-stage and sequential procedures. It also provides a computer program to execute both procedures and presents a numerical example.

Open All Close All