Mechanism Design and Implementation of Online Multi-attribute Procurement Auction with the Objective of Maximizing Social Welfare

Abstract

Abstract:

Given the actual requirements of government procurement online multi-attribute auction, the paper designs an optimal multiattribute reverse auction mechanism from the perspective of social welfare with the objective of maximizing the total revenue of buyers and sellers, taking advantage of the optimal mechanism design theory. The results show that the optimal payment is determined not only by its own production capacity, but also by the type of the other participants, while the optimal quality is only associated with its own production capacity. Using incomplete information game theory, the paper studies the implementation of the optimal auction mechanism from the perspective of auctioneer ruling and bidder's bidding strategy. With the decision supporting of online multi-attribute procurement platform, the auction can select the winner through the first phase of multi-attribute sealed bids, and get the optimal auction mechanism result through the second phase of multi-attribute open negotiations. Compared to the equilibrium bid result, the optimal auction mechanism slightly reduces the purchaser's income and significantly increases bidder's profits, resulting in an increase in overall welfare of buyer and seller. Theoretical analysis and case study have proved that the auction mechanism can find the optimal bidder and achieve the optimal result.

Key words: multi-attribute auction, government procurement, mechanism design, optimal auction implementation

Zhu Ge, Andrew B. Whinston. Mechanism Design and Implementation of Online Multi-attribute Procurement Auction with the Objective of Maximizing Social Welfare[J]. , 2016, 28(5): 47-60.

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