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Identifying Bid Leakage in Procurement Auctions: Machine Learning Approach

Published: 17 June 2019 Publication History

Abstract

We propose a novel machine-learning-based approach to detect bid leakage in first-price sealed-bid auctions. We extract and analyze the data on more than 1.4 million Russian procurement auctions between 2014 and 2018. As bid leakage in each particular auction is tacit, the direct classification is impossible. Instead, we reduce the problem of bid leakage detection to Positive-Unlabeled Classification. The key idea is to regard the losing participants as fair and the winners as possibly corrupted. This allows us to estimate the prior probability of bid leakage in the sample, as well as the posterior probability of bid leakage for each specific auction. We find that at least 16% of auctions are exposed to bid leakage. Bid leakage is more likely in auctions with a higher reserve price, lower number of bidders and lower price fall, and where the winning bid is received in the last hour before the deadline.

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MP4 File (p69-ivanov.mp4)

References

[1]
Pasha Andreyanov, Alec Davidson, and Vasily Korovkin. 2016. Corruption vs Collusion: Evidence from Russian Procurement Auctions. Technical Report. mimeo: UCLA.
[2]
Dmitry Ivanov. 2019. DEDPUL: Method for Mixture Proportion Estimation and Positive-Unlabeled Classification based on Density Estimation. arXiv preprint arXiv:1902.06965 (2019).

Cited By

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  • (2024)A Blockchain-based Privacy-Preserving Scheme for Sealed-bid AuctionIEEE Transactions on Dependable and Secure Computing10.1109/TDSC.2024.3353540(1-16)Online publication date: 2024
  • (2024)Should underwriters be trusted? Reducing agency costs through primary market supervisionThe British Accounting Review10.1016/j.bar.2024.101510(101510)Online publication date: Oct-2024
  • (2023)The Effectiveness of Machine Learning to Estimate the Risk of Failure in Brazilian Public Contracts2023 International Conference on Machine Learning and Applications (ICMLA)10.1109/ICMLA58977.2023.00313(2071-2078)Online publication date: 15-Dec-2023
  • Show More Cited By

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Published In

cover image ACM Conferences
EC '19: Proceedings of the 2019 ACM Conference on Economics and Computation
June 2019
947 pages
ISBN:9781450367929
DOI:10.1145/3328526
Permission to make digital or hard copies of part or all of this work for personal or classroom use is granted without fee provided that copies are not made or distributed for profit or commercial advantage and that copies bear this notice and the full citation on the first page. Copyrights for third-party components of this work must be honored. For all other uses, contact the Owner/Author.

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Association for Computing Machinery

New York, NY, United States

Publication History

Published: 17 June 2019

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Author Tags

  1. bid leakage
  2. corruption
  3. density estimation
  4. expectation-maximization
  5. gradient boosting
  6. mixture proportions estimation
  7. positive-unlabeled classification
  8. procurement auctions
  9. semi-supervised learning

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  • Extended-abstract

Funding Sources

  • Basic Research Program of the National Research University Higher School of Economics

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EC '19
Sponsor:
EC '19: ACM Conference on Economics and Computation
June 24 - 28, 2019
AZ, Phoenix, USA

Acceptance Rates

EC '19 Paper Acceptance Rate 106 of 382 submissions, 28%;
Overall Acceptance Rate 664 of 2,389 submissions, 28%

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EC '25
The 25th ACM Conference on Economics and Computation
July 7 - 11, 2025
Stanford , CA , USA

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Cited By

View all
  • (2024)A Blockchain-based Privacy-Preserving Scheme for Sealed-bid AuctionIEEE Transactions on Dependable and Secure Computing10.1109/TDSC.2024.3353540(1-16)Online publication date: 2024
  • (2024)Should underwriters be trusted? Reducing agency costs through primary market supervisionThe British Accounting Review10.1016/j.bar.2024.101510(101510)Online publication date: Oct-2024
  • (2023)The Effectiveness of Machine Learning to Estimate the Risk of Failure in Brazilian Public Contracts2023 International Conference on Machine Learning and Applications (ICMLA)10.1109/ICMLA58977.2023.00313(2071-2078)Online publication date: 15-Dec-2023
  • (2022)Explicitly Simple Near-Tie AuctionsAlgorithmic Game Theory10.1007/978-3-031-15714-1_7(113-130)Online publication date: 14-Sep-2022
  • (2022)A Noisy-Labels Approach to Detecting Uncompetitive AuctionsMachine Learning, Optimization, and Data Science10.1007/978-3-030-95467-3_15(185-200)Online publication date: 2-Feb-2022
  • (2021)Detecting Corruption in Single-Bidder Auctions via Positive-Unlabelled LearningMathematical Optimization Theory and Operations Research: Recent Trends10.1007/978-3-030-86433-0_22(316-326)Online publication date: 21-Sep-2021
  • (2020)AUCTIONS WITH LEAKS ABOUT EARLY BIDS: ANALYSIS AND EXPERIMENTAL BEHAVIOREconomic Inquiry10.1111/ecin.1295359:2(722-739)Online publication date: 26-Oct-2020
  • (2020)DEDPUL: Difference-of-Estimated-Densities-based Positive-Unlabeled Learning2020 19th IEEE International Conference on Machine Learning and Applications (ICMLA)10.1109/ICMLA51294.2020.00128(782-790)Online publication date: Dec-2020

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