Decision Making In Bidding-a Method Of Experimental Game Theory

The paper firstly analysis some main factors working on biding, which areEconomic of Scale, determination for cost of labour, material and equipment,construction organization plan, employer's prefer and market competition degree, andintroduce "market competition condition" to assay its impact on bidding result Thengame theory is brought forward and compared with some basal decision-makingmethods to lie out its specialty. That's standing out conflict of interest, eachdecision-making optimization and reciprocity of decision-making.According to the game theory, the decision behaviors for biding betweencontractors just match the incomplete information, non-cooperation, and N-PlayerGames. The question whether Nash equilibrium is existent or not when game theory isapplied to bidding decision-making is discussed. Besides, Nash equilibrium needtransform to Bayes-Nash equilibrium because of incomplete information.In the part of modeling, the paper gave principles about modeling: utilitymaximization and low price winning the bid. The research purpose is finding the bestprofit expectation, which fomented the assumption to make bidding decision on thebase of Game Theory. Subsequently, the paper theoretically described the biddingbehavior, assayed history information firstly, then according to the integrality of itdivide into two parts discussing the model. Average of market was adopted instead ofunknown competitor. Linear regression models was established to find therelationship between probability of win and profit rate. The profit rate was found atthe aim of max expectation utility, and the point where the contractor's best profitexpectation was got by proof analysis. An example was subsequently specialized totestify the model above. At last, supplementary materials were accounted for model.