Year: 1995
Author: Güth, Werner
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 115 (1995), Iss. 1 : pp. 1–26
Abstract
To derive the pricing rules of auctions and public tenders an intuitively convincing axiom is imposed demanding that, according to his bid, no bidder prefers another's trade to his own. Together with incentive compatibility this axiom allows only for the second highest bid-auction. Nevertheless the German history of public tenders (Verdingungsordnung für Bauleistungen/VOB) has always relied on the highest bid-price rule. By two equivalence theorems it is shown that without special assumptions this cannot be justified by differences in expected profits. This is, however, possible by the incentives for ring formation which the two pricing rules yield.
Journal Article Details
Publisher Name: Global Science Press
Language: Multiple languages
DOI: https://doi.org/10.3790/schm.115.1.1
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 115 (1995), Iss. 1 : pp. 1–26
Published online: 1995-01
AMS Subject Headings: Duncker & Humblot
Copyright: COPYRIGHT: © Global Science Press
Pages: 26