[UTMD-065] Beyond Quasilinearity: Exploring Nonlinear Scoring Rules in Procurement Auctions (by Makoto Hanazono, Jun Nakabayashi, Ryuji Sano, Masanori Tsuruoka)

Makoto Hanazono, Jun Nakabayashi, Ryuji Sano, Masanori Tsuruoka

This study examines procurement auctions in which a price-per-quality-ratio (PQR) scoring rule is used to evaluate bids consisting of price and quality. Equilibrium bidding behavior is characterized for first-score (FS) and second-score (SS) auctions in which bidder cost consists of unidimensional type and quality. In contrast to well-known quasilinear scoring rules, we show that the SS auction yields a lower expected score, and we provide a set of conditions under which expected quality and price are higher in the FS auction. We also find that buyers can achieve a lower PQR ratio by distorting the scoring rule.