Game theory can improve public procurement

Game theory can improve public procurement

November 18, 2020

Every year, the Danish public sector purchases goods and services from the private sector for approximately DKK 370 billion. This corresponds to approximately a third of the total public expenditures. But does Danish society get enough bang for its buck?

In practice, many public procurement professionals would admit that value for money is not always their primary focus – and accordingly, many procurers often don’t think enough about whether the rules of the game (in practice: how bids are scored and compared) are sufficient to generate meaningful competition between suppliers.

The use of game and auction theory, i.e. the understanding of how different rules impact the incentives of suppliers, could improve procurement practices and generate more value for the public sector – and for Danish taxpayers. The potential is great!

Our Senior Economist Neil Gallagher has written an article in covering this topic.

Read the full article (in Danish)

For further information, please contact Senior Economist Neil Gallagher