When can lotteries improve public procurement processes?

Arbeitspapier

We study the potential benefits of adding a lottery component to cut the main risks associated with standard negotiated and rule-based auction procurement procedures. We show that adopting a two stage approach in which bureaucrats first negotiate with a small number of bidders to assess their eligibility and, next, rely on a lottery to award the contract reduces corruption risks often observed in negotiated procedures. For rule-based procedures, we show that a "third-price lottery" in which the two highest bidders are selected with equal probability and the project is contracted at a price corresponding to the third highest bid can reduce limited liability, renegotiation, bid rigging and collusion risks.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IDB Working Paper Series ; No. IDB-WP-01364

Classification and Topics

• Classification: Wirtschaft ; Auctions ; Bureaucracy; Administrative Processes in Public Organizations; Corruption ; National Government Expenditures and Related Policies: Procurement
• Subject: rules ; discretion ; procurement ; lotteries ; corruption ; auctions

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Estache, Antonio ; Foucart, Renaud ; Serebrisky, Tomás
• Event: Veröffentlichung
• (who): Inter-American Development Bank (IDB)
• (where): Washington, DC
• (when): 2022

Further information

• DOI: doi:10.18235/0004522
• Last update: 10.03.2025, 11:44 AM CET