Skitmore, M and Runeson, G (2006) Bidding models: Testing the stationarity assumption. Construction Management and Economics, 24(8), pp. 791-803. ISSN 1466433X
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 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.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | behaviour; bidding; cusum method; deficit statistic; parameters |
| Index terms: | bidder, bidding, probability distribution, testing, variance, dataset |
| Subjects: | statistical analysis, professional practice, measurement and scaling, data management, bidding |
| Topics: | Research Practice, Engineering Principles, Digital Applications, Procurement |
| Descriptive scope: | 3 PCA |
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