Selection bias induced cost overruns

Vítor Gaspar, António P.N. Leite

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)


We develop a procurement model where given optimal rules regarding contractor selection, cost overruns are expected to occur. In this model, although the sponsor has access to unbiased ex ante estimates of project costs, the selection mechanism induces an ex post downward bias on project costs. We further investigate the relationship between signal's accuracy and the expected magnitude of the bias.

Original languageEnglish
Pages (from-to)175-187
Number of pages13
JournalInformation Economics and Policy
Issue number2
Publication statusPublished - 1 Jan 1989


  • cost overruns
  • Selection bias


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