2018/18 | LEM Working Paper Series | ||||||||||||||||
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Public Procurement and Reputation: An Agent-Based Model |
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Nadia Fiorino, Emma Galli, Ilde Rizzo and Marco Valente |
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Keywords | |||||||||||||||||
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Public works; Procurement; Agent-based modelling
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JEL Classifications | |||||||||||||||||
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H57; L14
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Abstract | |||||||||||||||||
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Based on the literature on public procurement regulation, we
use an Agent-Based Model to assess the performance of different
selection procedures. Specifically, we aim at investigating whether
and how the inclusion of reputation of firms in the public procurement
selection process affects the final cost of the contract. The model
defines two types of actors: i) firms potentially competing to win the
contract; ii) a contracting authority, aiming at minimizing
procurement costs. These actors respond to environmental conditions
affecting the actual costs of carrying on the project and unknown to
firms at the time of bidding and to the contracting authority. The
results from the model are generated through simulations by
considering different congurations and varying some parameters of the
model, such as the firms' skills, the level of opportunistic rebate, the
relative weight of reputation and rebate. The main conclusion is that
reputation matters and some policy implications are drawn.
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