DEA based auctions

We discuss the design of a multi-dimensional procurement mechanism that combines Data Envelopment Analysis (DEA) and auction theory. The mechanism selects an agent to provide 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 acquirer. This is done within a context of asymmetric information and strategic behavior as well as possibly correlated costs. The mechanism makes it individually rational and incentive compatible to participate and reveal costs, and the outcome is socially optimal (allocatively efficient).