Public Procurement and Reputation: An Agent-Based Model

29 Pages Posted: 8 Oct 2018

See all articles by Nadia Fiorino

Nadia Fiorino

University of L'Aquila - Faculty of Economics

Emma Galli

University of Rome I - Faculty of Political Science

Ilde Rizzo

University of Catania - Department of Economics and Business

Marco Valente

University of L'Aquila; University of Sussex - Science and Technology Policy Research Unit (SPRU); Ruhr Universität Bochum

Date Written: October 2018

Abstract

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 which are unknown to firms and to the contracting authority at the time of bidding. The results from the model are generated through simulations by considering different configurations 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.

Keywords: Public works; Procurement; Agent-based modelling.

JEL Classification: H57, L14, C63

Suggested Citation

Fiorino, Nadia and Galli, Emma and Rizzo, Ilde and Valente, Marco, Public Procurement and Reputation: An Agent-Based Model (October 2018). SWPS 2018-17 . Available at SSRN: https://ssrn.com/abstract=3268038 or http://dx.doi.org/10.2139/ssrn.3268038

Nadia Fiorino

University of L'Aquila - Faculty of Economics ( email )

Roio Poggio, 67040
Italy

Emma Galli

University of Rome I - Faculty of Political Science ( email )

Piazzale Aldo Moro
Rome, 00185
Italy

Ilde Rizzo

University of Catania - Department of Economics and Business ( email )

Corso Italia 55
Catania, 95129
Italy

Marco Valente (Contact Author)

University of L'Aquila ( email )

Piazza del Santuario, 19
Roio Poggio - L'Aquila, 67040
Italy

University of Sussex - Science and Technology Policy Research Unit (SPRU) ( email )

Mantell Building
Falmer
Brighton BN1 9RH UK, Sussex
United Kingdom

Ruhr Universität Bochum ( email )

Faculty of Management and Economics
Chair of International Economics
Bochum, 44780
Germany

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