The role of undisclosed reserves in English open outcry auctions

This study considers the role that reserve prices may play in residential property auctions. In comparison to much of the previous empirical work, this study has access to undisclosed reserve prices from English auctions. Consistent with theoretical arguments in the auction literature, the results obtained illustrate that whilst higher reserve prices increase the revenue obtained for the seller, they also reduce the probability of sale. The findings also highlight the importance of auction participation, with the number of individual bidders and the number of bids significant in most specifications.

The role of undisclosed reserves in English open outcry auctions

This study considers the role that reserve prices may play in residential property auctions. In comparison to much of the previous empirical work, this study has access to undisclosed reserve prices from English auctions. Consistent with theoretical arguments in the auction literature, the results obtained illustrate that whilst higher reserve prices increase the revenue obtained for the seller, they also reduce the probability of sale. The findings also highlight the importance of auction participation, with the number of individual bidders and the number of bids significant in most specifications.

The iso-Score Curve Graph. A new tool for competitive bidding

The present work describes a new tool that helps bidders improve their competitive bidding strategies. This new tool consists of an easy-to-use graphical tool that allows the use of more complex decision analysis tools in the field of Competitive Bidding. The graphic tool described here tries to move away from previous bidding models which attempt to describe the result of an auction or a tender process by means of studying each possible bidder with probability density functions. As an illustration, the tool is applied to three practical cases. Theoretical and practical conclusions on the great potential breadth of application of the tool are also presented.

On competitive bidding: scoring and position probability graphs

Iso-score curves graph (iSCG) and mathematical relationships between Scoring Parameters (SP) and Forecasting Parameters (FP) can be used in Economic Scoring Formulas (ESF) used in tendering to distribute the score among bidders in the economic part of a proposal. Each contracting authority must set an ESF when publishing tender specifications and the strategy of each bidder will differ depending on the ESF selected and the weight of the overall proposal scoring. The various mathematical relationships and density distributions that describe the main SPs and FPs, and the representation of tendering data by means of iSCGs, enable the generation of two new types of graphs that can be very useful for bidders who want to be more competitive: the scoring and position probability graphs.

Estimating future bidding performance of competitor bidders in capped tenders

Research in Bid Tender Forecasting Models (BTFM) has been in progress since the 1950s. None of the developed models were easy-to-use tools for effective use by bidding practitioners because the advanced mathematical apparatus and massive data inputs required. This scenario began to change in 2012 with the development of the Smartbid BTFM, a quite simple model that presents a series of graphs that enables any project manager to study competitors using a relatively short historical tender dataset. However, despite the advantages of this new model, so far, it is still necessary to study all the auction participants as an indivisible group; that is, the original BTFM was not devised for analyzing the behavior of a single bidding competitor or a subgroup of them. The present paper tries to solve that flaw and presents a stand-alone methodology useful for estimating future competitors’ bidding behaviors separately.

Quick abnormal-bid-detection method for construction contract auctions

Noncompetitive bids have recently become a major concern in both public and private sector construction contract auctions. Consequently, several models have been developed to help identify bidders potentially involved in collusive practices. However, most of these models require complex calculations and extensive information that is difficult to obtain. The aim of this paper is to utilize recent developments for detecting abnormal bids in capped auctions (auctions with an upper bid limit set by the auctioner) and extend them to the more conventional uncapped auctions (where no such limits are set). To accomplish this, a new method is developed for estimating the values of bid distribution supports by using the solution to what has become known as the German Tank problem. The model is then demonstrated and tested on a sample of real construction bid data, and shown to detect cover bids with high accuracy. This paper contributes to an improved understanding of abnormal bid behavior as an aid to detecting and monitoring potential collusive bid practices.