0937e642_Game_Theory_Discussion_Group__Title_and_abstract
[Date/Time] November 2, 2004 5:30 -- 7:00 PM [Location] Wean 4625 [Speaker] Cuihong Li [Title and abstract] 
Supply contract auctions with uncertain demand We consider a procurement auction between a buyer and competitive suppliers in a single period model. At the time of the auction the buyer's demand is uncertain. After being awarded a supply contract the winning supplier decides and invests in the production capacity. We consider the optimal auction mechanism for the buyer for both the cases when the supplier's capacity investment is observable to the buyer, and when it is unobservable. The performance of a few simplier and practically used mechanisms that imply different sources of risks are examined compared to the optimal result. The pay-on-production mechanism bound by a service level agreement achieves near optimal profits.
Game Theory Discussion Group
Title and abstract