Seminario di Riccardo Camboni Marchi Adani

ore 11.00 Sala Seminari – I° piano, Palazzo Levi Cases, Via del Santo 33

21.12.2016

Favouritism in Scoring Rule Auctions

Seminario di Riccardo Camboni Marchi Adani, Università di Verona Verona e University Paris 1, Pantheon-Sorbonne

Scoring rule auctions (SRAs) can be a powerful mechanism to procure complex works or services, when quality matters. However, given the buyer’s discretion in the design of SRAs, favouritism can arise as a drawback. In this paper we empirically document potential favouritism in an original dataset of 196 SRAs for the procurement of canteen services in Italy over the period 2009-2013. We then sketch a simple model highlighting how an SRAs with multidimensional quality can be distorted to favour the incumbent bidder winning the competition. Finally we design and run a new empirical test to verify our theoretical result. We find that SRAs can be distorted to favour the incumbent bidder, and that the victory of the incumbent is associated with less competition and higher prices.