Auctioning Incentive Contracts: An Experimental Study

Tinbergen Institute Discussion Paper 09-101/1

29 Pages Posted: 18 Nov 2009 Last revised: 19 Jun 2010

See all articles by Sander Onderstal

Sander Onderstal

University of Amsterdam; Tinbergen Institute

Arthur Van de Meerendonk

University of Maastricht - Maastricht School of Governance

Date Written: November 16, 2009

Abstract

In this note, we experimentally examine the relative performance of price-only auctions and multi-attribute auctions. We do so in procurement settings where the buyer can give the winning bidder incentives to exert effort on non-price dimensions after the auction. Both auctions theoretically implement the surplus maximizing mechanism. Our experiment confirms this result. Moreover, we observe that the “pie” is shared the same in both auctions between buyer and suppliers both in theory and in the lab (after accounting for learning effects).

Keywords: Procurement, Price-only auctions, Multi-attribute auctions, Incentive Contracts, Laboratory Experiment

JEL Classification: C91, D44, D86

Suggested Citation

Onderstal, Sander and Van de Meerendonk, Arthur, Auctioning Incentive Contracts: An Experimental Study (November 16, 2009). Tinbergen Institute Discussion Paper 09-101/1, Available at SSRN: https://ssrn.com/abstract=1506967 or http://dx.doi.org/10.2139/ssrn.1506967

Sander Onderstal (Contact Author)

University of Amsterdam ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Arthur Van de Meerendonk

University of Maastricht - Maastricht School of Governance ( email )

Maastricht
Netherlands

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
72
Abstract Views
693
rank
389,203
PlumX Metrics