Social-Risk Dual-Cost Based Optimal Strategies in Open or Invited Bidding

This paper constructs a dynamic game between the tenderee and bidders as well as two static games between two bidders to examine the optimal bidding strategies with consideration of the open and invited biddings, three types of bidders (i.e. integrity, speculation, and abstention), and social-risk dual cost. The results indicate that reducing the risk costs in an open bidding or increasing the risk costs in an invited bidding can raise the probability of the integrity bidders winning the bid. Moreover, whether in an open or invited bidding, the probability of winning the bid at a low price can be increased by decreasing the social and risk costs of bidders as well as increasing the loss of the bidders failing to the bid. This paper contributes a new theoretical perspective for investigating the optimal bidding strategy.