The role of transparency in procurement: Revealed versus concealed scoring rules in sealed bid A + B auctions

Bernardo F. Quiroga, Brent B. Moritz, V. Daniel R. Guide

Research output: Contribution to journalArticlepeer-review

Abstract

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.

Original languageEnglish (US)
Pages (from-to)71-81
Number of pages11
JournalJournal of Operations Management
Volume67
Issue number1
DOIs
StatePublished - Jan 2021

All Science Journal Classification (ASJC) codes

  • Strategy and Management
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering

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