Imitation Perfection—A Simple Rule to Prevent Discrimination in Procurement
American Economic Journal: Microeconomics
vol. 12,
no. 3, August 2020
(pp. 189-245)
Abstract
Procurement regulation aimed at curbing discrimination requires equal treatment of sellers. However, Deb and Pai (2017) show that such regulation imposes virtually no restrictions on the ability to discriminate. We propose a simple rule—imitation perfection—that restricts discrimination significantly. It ensures that in every equilibrium, bidders with the same valuation distribution and the same valuation earn the same expected utility. If all bidders are homogeneous, revenue and social surplus optimal auctions consistent with imitation perfection exist. For heterogeneous bidders, however, it is incompatible with revenue and social surplus optimization. Thus, a trade-off between non-discrimination and optimality exists.Citation
Mass, Helene, Nicolas Fugger, Vitali Gretschko, and Achim Wambach. 2020. "Imitation Perfection—A Simple Rule to Prevent Discrimination in Procurement." American Economic Journal: Microeconomics, 12 (3): 189-245. DOI: 10.1257/mic.20160250Additional Materials
JEL Classification
- D44 Auctions
- D82 Asymmetric and Private Information; Mechanism Design
- H57 National Government Expenditures and Related Policies: Procurement
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