JOURNAL ARTICLE
Cite JOURNAL ARTICLE
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Format
Preisregeln für Auktionen und Ausschreibungen
Eine ordnungspolitische Analyse
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 115 (1995), Iss. 1 : pp. 1–26
Additional Information
Article Details
Güth, Werner
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.