Analysis of First Price Sealed Bidding (FPSB) Using Game Theory,
Abstract
This thesis analyzes the First Price Sealed Bidding (FPSB) procurement method using computer simulations. The First Price Sealed Bidding is a static Bayesian Game with incomplete information. These games have a well defined Bayesian Nash equilibrium. Using this theory, this study found the bidders' equilibrium strategies. The equilibrium strategy is the strategy that maximizes bidders' profit simultaneously. Some assumptions have been made to be able to construct a model for the FPSB. Then, the model was transformed into computer simulation code using Visual Basic programming language. Two different simulation programs used to experiment with several scenarios under uniform and triangular production cost distributions. The simulation showed the bidders' behavior and identified factors affecting the bidders' decision while preparing their bids. The most influential factors found to be production cost distributions and number of bidders. Concluding observations concerning both buyers and bidders present the results derived from the analysis of experiments.
Document Details
- Document Type
- Technical Report
- Publication Date
- Dec 01, 1997
- Accession Number
- ADA342280
Entities
People
- Suat Tozendemir
Organizations
- Naval Postgraduate School