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The role of transparency in procurement: Revealed versus concealed scoring rules in sealed bid A + B auctions
Author(s) -
Quiroga Bernardo F.,
Moritz Brent B.,
Guide V. Daniel R.
Publication year - 2021
Publication title -
journal of operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.649
H-Index - 191
eISSN - 1873-1317
pISSN - 0272-6963
DOI - 10.1002/joom.1104
Subject(s) - bidding , scoring rule , government procurement , procurement , transparency (behavior) , business , agency (philosophy) , common value auction , microeconomics , industrial organization , marketing , economics , computer science , computer security , philosophy , epistemology , machine learning
We investigate the impact of using a clear scoring rule in a sealed bid multi‐dimensional (A+B) procurement auction, as frequently used in government procurement. The central procurement agency in Chile (ChileCompra) asked for help to understand how concealing the scoring rule affected buyers. Using an experiment, we analyze the effect of transparently communicating the scoring rule on bidding outcomes by comparing the buyer's surplus and supplier profits when buyers expressly communicate the weight they place on a nonmonetary (B) attribute, versus when this information is concealed from bidders. In addition, we compare outcomes where the scoring rule is made visible only after the offers are submitted. If the scoring rule is not disclosed, outcomes are poorer for buyers, and sellers see their profits increase.