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Bidding models: testing the stationarity assumption

Skitmore, Martin & Runeson, Goran (2006) Bidding models: testing the stationarity assumption. Construction Management and Economics, 24(8), pp. 791-803.

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Abstract

With notably few exceptions, bidding models contain probability distributions with parameters that are assumed to be fixed, or stationary, over time. Some methods of method of testing the tenability of this assumption are examined and applied to eight datasets. Of particular interest is the statistical significance of two types of periodicity; (1) that bidders gradually reduce their bids prior to winning a contract and (2) that bidders have periods in which they are more competitive and periods in which they are less competitive. To test (1), McCaffer and Pettitt’s (1976) cusum method is used and shown to have a limited interpretation in this context. McCaffer’s ‘deficit’ statistic is then used in conjunction with a one-way analysis of variance (ANOVA) and shows (1) to be untenable for the samples involved. To test (2), the deficit statistic is again used with an ANOVA to examine all possible sub series of bids.

Impact and interest:

6 citations in Scopus
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ID Code: 4225
Item Type: Journal Article
Keywords: Bidding, behaviour, parameters, cusum method, deficit statistic
DOI: 10.1080/01446190600680432
ISSN: 1466-433X
Subjects: Australian and New Zealand Standard Research Classification > TECHNOLOGY (100000)
Divisions: Past > QUT Faculties & Divisions > Faculty of Built Environment and Engineering
Past > Schools > School of Urban Development
Copyright Owner: Copyright 2006 Taylor & Francis
Copyright Statement: First published in Construction Management and Economics 24(8):pp. 791-803.
Deposited On: 18 May 2006
Last Modified: 29 Feb 2012 23:20

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