The CMS Auction: Experimental Studies of a Median-Bid Procurement Auction with Nonbinding Bids

S-Tier
Journal: Quarterly Journal of Economics
Year: 2012
Volume: 127
Issue: 2
Pages: 793-827

Authors (3)

Brian Merlob (not in RePEc) Charles R. Plott (California Institute of Techno...) Yuanjun Zhang (not in RePEc)

Score contribution per author:

2.681 = (α=2.01 / 3 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We report on the experimental results of simple auctions with (i) a median-bid pricing rule and (ii) nonbinding bids (winning bids can be withdrawn)--the two central pillars of the competitive bidding program designed by the Centers for Medicare and Medicaid Services (CMS). Comparisons between the performance of the CMS auction and the performance of the excluded-bid auction reveal the problematic nature of the CMS auction. The CMS auction fails to generate competitive prices of goods and fails to satisfy demand. In all proposed efficiency measures, we find the excluded-bid auction significantly outperforms the CMS auction. Copyright 2012, Oxford University Press.

Technical Details

RePEc Handle
repec:oup:qjecon:v:127:y:2012:i:2:p:793-827
Journal Field
General
Author Count
3
Added to Database
2026-01-29