{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2025,10,10]],"date-time":"2025-10-10T00:58:32Z","timestamp":1760057912330,"version":"build-2065373602"},"reference-count":57,"publisher":"MDPI AG","issue":"2","license":[{"start":{"date-parts":[[2025,3,3]],"date-time":"2025-03-03T00:00:00Z","timestamp":1740960000000},"content-version":"vor","delay-in-days":0,"URL":"https:\/\/creativecommons.org\/licenses\/by\/4.0\/"}],"content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":["Games"],"abstract":"<jats:p>The coexistence of the winner\u2019s curse and cost overruns in the construction industry implies a cost pendulum in which the winning bid is undervalued, whereas the final payment to the contractor is overvalued. We posit that this results from a strategic interaction between three stakeholders: the public agency (PA), the project manager (PM), and the winning contractor, and we propose a game-theoretic framework to model this dynamic. In the current state of practice, the subgame between the contractor and the PM leads to opportunistic contractor behavior and lenient supervision, resulting in increased costs for the PA. We analyze how procedural and cultural interventions by the PA, specifically shifting from a low-bid to an average-bid auction and incentivizing stricter PM oversight, alter the strategic equilibrium. Our findings indicate that while each change alone provides limited improvement, implementing both significantly reduces cost overruns by aligning stakeholder incentives. The findings of this analysis provide insight into how public agencies can mitigate the widespread problem of cost overruns.<\/jats:p>","DOI":"10.3390\/g16020011","type":"journal-article","created":{"date-parts":[[2025,3,3]],"date-time":"2025-03-03T05:52:16Z","timestamp":1740981136000},"page":"11","update-policy":"https:\/\/doi.org\/10.3390\/mdpi_crossmark_policy","source":"Crossref","is-referenced-by-count":0,"title":["Game Theory Framework for Mitigating the Cost Pendulum in Public Construction Projects"],"prefix":"10.3390","volume":"16","author":[{"ORCID":"https:\/\/orcid.org\/0000-0001-7296-8852","authenticated-orcid":false,"given":"Yahel","family":"Giat","sequence":"first","affiliation":[{"name":"Department of Industrial Engineering, Jerusalem College of Technology, Jerusalem 9116001, Israel"}]},{"ORCID":"https:\/\/orcid.org\/0000-0003-0695-8853","authenticated-orcid":false,"given":"Amichai","family":"Mitelman","sequence":"additional","affiliation":[{"name":"Department of Civil Engineering, Ariel University, Ariel 4070000, Israel"}]}],"member":"1968","published-online":{"date-parts":[[2025,3,3]]},"reference":[{"key":"ref_1","doi-asserted-by":"crossref","first-page":"04015076","DOI":"10.1061\/(ASCE)CO.1943-7862.0001058","article-title":"Construction bidding and the winner\u2019s curse: Game theory approach","volume":"142","author":"Ahmed","year":"2016","journal-title":"Journal of Construction Engineering and Management"},{"key":"ref_2","doi-asserted-by":"crossref","first-page":"1005","DOI":"10.1353\/sor.2016.0064","article-title":"Of Hiding Hands and other ways of coping with uncertainty: A commentary","volume":"83","author":"Anheier","year":"2016","journal-title":"Social Research"},{"key":"ref_3","doi-asserted-by":"crossref","first-page":"04018061","DOI":"10.1061\/(ASCE)CP.1943-5487.0000803","article-title":"Owner\u2019s perspective on evolution of bid prices under various price-driven bid selection 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