Pub Date : 1900-01-01DOI: 10.1109/icebeg.2011.5882171
Liu Shu-lin
In practical multi-attribute procurement auctions,profit and winning a contract have different implications for different suppliers.This paper assumes that the suppliers weight profit and winning a contract with Cobb-Douglas utility function,obtain the equilibrium bidding strategies of the suppliers and procurer' expected utilities in the first-and second-score auctions,and compares them with those under risk-neutral assumption.The quality depends only on the cost parameters of providers and the scoring function,the more weights on the winning probability,the higher the expected utilities the buyer obtains.When the only feasible scoring rule is the buyer's utility function,the buyer should use second-score auction to cut cost if suppliers weigh profit heavily,otherwise the buyer should use first-score auction.
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