Malin Arve: Dynamic Procurement Under Uncertainty: Competition and Auctions
OFS seminar. Malin Arve is an assistant professor at the Norwegian School of Economics.
Malin Arve will present the working paper «Dynamic Procurement Under Uncertainty: Competition and Auctions», written jointly with David Martimort.
We introduce risk aversion into the analysis of an optimal procurement contract for a basic service and an add-on whos costs are uncertain. We focus on the case of fixed-size projects that are allocated through competitive tenders. We show how the procurement agency can use the structure of profits to relax the cost of information acquisition and the ambiguous impact of risk aversion on bidding behavior and reserve prices.