Modeling the Heterogeneity in Contractors’ Mark-Up Behavior
Publication: Journal of Construction Engineering and Management
Volume 136, Issue 7
Abstract
Individual contractors exhibit different bidding behaviors when confronted with a given set of project decision environment factors, i.e., heterogeneity in the population of contractors. In examining the tenability of the bidder homogeneity assumption, a linear mixed modeling approach is applied to two data sets obtained from Hong Kong and Singapore contractors via a bidding experiment. Two linear mixed models were developed by relating the contractors’ mark-up decision to four project decision environment factors, namely, (1) market conditions; (2) number of bidders; (3) project type; and (4) project size. The results show that not only is there a significant heterogeneity between the Hong Kong and the Singapore contractors in terms of both their preferences (intercepts) and responses (slopes) to the project decision environment factors that affect their mark-up decision, but also that the individual Hong Kong and Singapore contractors have different degrees of sensitivity toward the project decision environment factors (which is reflected in the varying individual-specific intercepts and slopes). These individual-specific parameter estimates have implications for managerial action in formulating a firm’s competitive strategies.
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Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 136 • Issue 7 • July 2010
Pages: 720 - 729
Copyright
© 2010 ASCE.
History
Received: Feb 21, 2009
Accepted: Dec 22, 2009
Published online: Jun 15, 2010
Published in print: Jul 2010
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