Analysis of procurement auctions with different type of bargaining solutions

In the context of this thesis, the results of a cooperative bargaining and non-cooperative auction method, are compared from the perspective of the purchaser. The main objective of the study is to analyze which procurement method will give better results to the purchaser. In line with this goal, firstly, the most known axiomatic bargaining model Nash bargaining solution was compared with Kalai - Smorodinsky bargaining solution. The answer to the question of which bargaining solution provides the highest average utility to the players during long series of game in a two person and symmetric bargaining problem were searched. Afterwards, it was researched that if the purchaser obtains the product that is needed from a competitive environment among potential suppliers, which auction method would be more advantageous to be used. Depending on the revenue equivalence theorem in the sales auction, although the result of each type of procurement might result in the same expected revenue in terms of the auction designer, the type of tender to be applied has different results on the expected payment of the purchaser. Finally, it has been concluded that each time the purchaser should decide on the basis of parameters of the newly identified problem when he has to make a choice between these two basic methods of purchase. Keywords: Nash bargaining solution, Kalai-Smorodinsky bargaining solution, procurement auction, Monte Carlo simulation, expected payment, comparison