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A bayesian forecasting model for sequential bidding
Author(s) -
Attwell D. N.,
Smith J. Q.
Publication year - 1991
Publication title -
journal of forecasting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.543
H-Index - 59
eISSN - 1099-131X
pISSN - 0277-6693
DOI - 10.1002/for.3980100603
Subject(s) - bidding , computer science , bayesian probability , competitor analysis , flexibility (engineering) , probabilistic forecasting , sequence (biology) , operations research , econometrics , process (computing) , bayesian inference , economics , artificial intelligence , microeconomics , probabilistic logic , engineering , management , biology , genetics , operating system
In this paper we consider the problem facing a company in selecting the values of bids to submit on a sequence of contracts put out to tender. A simple‐to‐implement Bayesian forecasting model is presented, based on a steady Dirichlet process whose states are indexed by the possible bid decisions open to the company. The model gives an explicit algorithm for calculating the state probabilities, needing only data on the lowest bid made by the company's competitors. The flexibility of the basic model makes it a potentially powerful forecasting system for use by companies bidding for contracts.