January 11, 2017 Riccardo Marchi Adani University of Verona

Riccardo Marchi Adani, Paola Valbonesi

(University of Verona, University of Padova)

“Favouritism in scoring rule auctions”

Date
Wednesday, January 11th, 2017
6:30 p.m. to 8 p.m.

Location
IAE de Paris – 8 bis rue la Croix-Jarry, 75013 Paris 
Building A – Room A4

Speaker
Riccardo Marchi Adani (University of Verona)

Authors
Riccardo Marchi Adani (Chaire EPPP – University of Verona)
Paola Valbonesi, (University of Padova)

Abstract: 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 SRA with multidimensional quality can be distorted to favour the incumbent bidder winning the competition. Finally 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.

Short bio:  Riccardo Marchi Adani received his Ph.D. on April 2016 from the University of Verona. He is actually in Paris, at the Chaire EPPP, thanks to a grant from Unicredit. His main research interest is in the study of design and pathologies of the public procurement. He is especially interested in the use of multidimensional auctions as a tool to obtain quality at the best value for money in a period of scarce public resources and in the study of the procurement in the health sector.

Download the paper here