Corruption in scoring auctions

Abstract

Scoring auctions, a mechanism designed to evaluate bids on multidi mensional attributes, have become a cornerstone of public procurement. This thesis examines how corruption— bribery and biased preference shocks affecting the auctioneer’s scoring decisions—erodes the efficiency and integrity of scoring auctions. Based on the seminal two-attribute auction framework, a formal game-theoretic model is introduced in which each firm quotes a price and quality level. A scoring rule cal ibrated exogenously combines these attributes to identify the winning bid. Corruption is introduced into the model through an auctioneer’s favoritism function, which is a function of a bribe transfer and an id iosyncratic preference shock. The favoritism function systematically inflates the announced quality of the favored bidder, distorting the scor ing rule and leading to suboptimal procurement decisions.