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Chinese Journal of Management Science ›› 2016, Vol. 24 ›› Issue (8): 164-171.doi: 10.16381/j.cnki.issn1003-207x.2016.08.020

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A Research on Multi-attribute Bidding Game of Government Projects when Tenderee's Preference is Hidden

HE Jian-hong1, LV Wei2   

  1. 1. School of Economy and Management, Chongqing University of Communications and Posts, Chongqing 400065, China;
    2. School of Management, Southwest University of Political and law, Chongqing 401120, China
  • Received:2014-08-19 Revised:2015-04-14 Online:2016-08-20 Published:2016-08-24

Abstract: In China, the Law of Bidding has come into operation for about fifteen years, which helped to increase the efficiency of the government construction projects. The law not only played an important role in improving the quality and reducing the cost of the government construction projects, but also ensured that the projects were completed on schedule. However, there are still many problems left to be resolved. For instance, the tenderee may set some unnecessary conditions in bidding for government projects so that the specified tenderer can win the bidding easily. Even on some occasions, the tenderer who bought off agents and judges final won the bidding. So the bidding for government construction projects has been criticized for years. Some more efficient and fairer bidding institutions have to be found to prevent public interest of government projects.According to Harsanyi's method of introduction a suppositional player, the incomplete Game of multi-attribute bidding of government projects is transformed to a complete but imperfect information game in which tenderee's preference is hidden, and then perfect Bayesian Nash equilibrium and the bidding strategy of the tender and tenderee are given. The results show that there is "U" shaped relationship between the tenderee's remaining utility or benefit and the tender's commitment to quality and duration. The same relation exists between the tenderer's benefit and its commitment to quality and duration. This means that (1) if the tender will be able to take appropriate measures to keep their own preference hided, and the tenderer can ensure the commitment quality and duration to reach a certain level, the tenderer will make the greatest efforts to improve their quality and the duration, in order to increase the probability of winning; (2) if the tenderer's quality and duration of construction projects meet the certain requirement (ie. the lowest point of the "U" curve), its optimal strategy will ensure the tenderee acquire the best offer and the largest remaining utility; (3) in this case, the tenderers will form a prospective that the tenderer would set a high level requirement of quality and duration, and then their motivations to rent-seeking and complot will extremely decline.In addition, it is also found that when thetenderee hide its preference for quality and duration, the tender will do its best to improve their offer as possible, which will improve the efficiency of government projects. So government needs to develop s strict confidentiality procedures and rules to prevent the behaviors of the tenderer, tenderee and agent.

Key words: government projects, multi-attribute, tenderee's preference, hidden, game

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