Information Disclosure in Open Non-Binding Procurement Auctions

We study non-binding procurement auctions where both price and nonprice characteristics of bidders matter for being awarded a contract. The outcome of such auctions critically depends on how information is distributed among bidders during the bidding process. As we show theoretically, whether it is in the buyer’s interest to disclose or to conceal non-price information depends on the precise relationship between bidders’ procurement cost and their qualities. We empirically study the impact of a change in the information structure using data from a large European online procurement platform. In a counterfactual analysis we analyze the reduction of non-price information available to the bidders. We find that on average bidders’ price quotes would increase by 5%, auction turnover would increase by 8%, and buyers’ welfare would be reduced by 8%.