Too much balance in unbalanced bidding

Publisher's full text
Svante Mandell

This article adds to the theoretical base of unbalanced bidding in auction theory. The importance of this concept is justified by being a decisive feature in the make-or-buy decision of a client who cannot rely on repeated interaction, often the case in public procurement, for example. Earlier theoretical models on unbalanced bidding often predict corner solutions, that is, zero bids for unit prices of expected overestimated quantities. However, anecdotal evidence indicates a lack of zero bids in the actual contracts. The article offers a possible explanation for this anomaly by focusing on the risk-aversion of the contractor. Using a simple model, it shows that a contractor with superior information may exploit this in the bidding process to increase her expected revenue. This increases risk exposure. A risk-averse contractor will typically avoid a corner solution to reach an optimal balance between risk and expected return.



Vision Zero for Sustainable Road Safety in the Baltic Sea Region

The conference Vision Zero for Sustainable Road Safety in the Baltic Sea Region is held i Vilnius, Lithuania. VTI is part of the organisation committé and also one of the speakers.



VTI participated in conference on electric roads

Systems with electrified roads are a relatively new concept and many projects have been launched in recent years. To stimulate the transfer of knowledge and collaboration, the Research and Innovation Platform for Electric Roads arranged its second...


ADAS&ME is tackling the interaction between people and technology

ADAS&ME is a major EU project focused on automation, the human condition and the human environment. The budget is EUR 9.6 million and VTI is the coordinator.


Users contribute to the development of train simulators

Apart from advanced driving simulators, VTI has developed several variations of train simulators which are used for training, education and research. In recent years, interest has increased drastically among major actors in the railway sector, and VTI has...


VR study to contribute to a better working environment for bus drivers

A study where bus drivers test autonomous driving in a VR environment may contribute to a better working environment with reduced stress on the driver and safer driving.


Non-native plant species spread via transport systems

Researchers at VTI have compiled a report on non-native invasive plant species in Sweden and how they spread via transport systems.


EU-project VIRTUAL: improving road safety with virtual crash tests

Crash tests are used to improve safety on roads. Therefore the EU now funds a research project to develop virtual methods of crash testing. VTI coordinates the project, called VIRTUAL. The project now invites experts interested in Human Body Modeling to join...