Improving Successful A+B Procurement Auctions with Negotiations

In A+B procurement auctions the buyer's utility is linear and the bidders' utility is assumed to be quasi-linear. If this assumption is met, then a successful auction may conclude with an efficient winning bid which maximizes both the buyer's utility and social welfare. If this assumption is not met, then an auction is either efficient and maximizes social welfare or it maximizes the buyer's utility. If the bidders are risk-averse, then a winning bid that maximizes the buyer's utility may be further improved through negotiations. It is possible to introduce side-payments which increase utility values of both the buyer and the seller.

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