DEA based auctions

We discuss the design of multi-dimensional tender and auction mechanisms that combine Data Envelopment Analysis (DEA) and auction theory. The mechanisms select an agent to perform or acquire a project characterized by multiple attributes. The optimal configuration of the multiple attributes is settled endogenously by trading off the costs to the provider with the benefits to the acquiring. This is done within a context of asymmetric information and strategic behavior as well as possibly correlated costs. The mechanisms make it individually rational and incentive compatible to participate and reveal costs and benefits, and the outcome is socially optimal (allocatively efficient).