How to recognize a bluff in electronic bidding

The aggressive entry mechanism in Bełchatów

In October 2023, we monitored a bid for the supply of aggregate for a road company near Bełchatów. 5 entities were involved, and the starting rate was 184,000 PLN. One of the bidders, a large company with external capital, started outbidding every offer within just 4 seconds of its appearance. For most entrepreneurs, this is a signal that the rival has an unlimited budget and it's not worth wasting time. However, we checked 12 behavioral variants of this specific player based on their public results from the last 8 months. The numbers told a different story than their aggressive clicking.

The analysis showed that their margin for this project would vanish at the amount of 162,500 PLN. Their reaction speed did not result from self-confidence, but from a set automaton designed to discourage local suppliers. We advised our client to hold off on moving for 11 minutes, which completely knocked the rival out of rhythm. When the automaton stopped working because no one was 'feeding' it new rates, the competitor had to switch to manual mode. That was when, at a rate of 164,200 PLN, their determination suddenly died out. Your rival had already calculated their chances, but they did so incorrectly, assuming your fear.

Ultimately, the auction ended at 163,800 PLN. Our client won the tender, saving 4,300 PLN compared to their original safety limit. This shows that an online bluff has very short legs if you only have a calculator and a cool head at hand. In electronic bidding, the winner isn't the one who clicks fastest, but the one who knows at what point the rival starts paying out of pocket. Statistics from our 47 projects served show that 31% of aggressive behaviors at the start are pure psychological games with no cash backing.

Aggressive clicking within 4 seconds is often an automaton meant to scare you, not a rival's real budget.

Reaction time as hard mathematical evidence

Numbers speak louder than a bluff, especially when we measure server and human response times. During an auction for transport services in Kutno conducted in February 2024, we noticed an interesting regularity. The competitor responded to our offers in exactly 14 seconds or 28 seconds. Such repeatability in mathematics is rarely a coincidence. This suggested that on the other side sat an employee who had to consult every decision with a superior via an internal communicator. This is key information for us: the rival does not have full decision-making power and is afraid of risk.

We used this knowledge to impose our own pace. We started bidding at irregular intervals – once after 3 minutes, once after 15 seconds. This introduced chaos into the rival's decision-making process. Their response time extended to 3.2 minutes, which meant a nervous discussion about the order's profitability had broken out within the company. At Konsens Logika, we know that changing the bidding rhythm is the simplest way to pull an opponent out of their comfort zone. If a rival needs 14 seconds to respond, it means they are not sure of their lowest price.

For the small transport company from Łódź that we represented, this meant a psychological advantage. We knew their limit ended around 42,000 PLN net for monthly transports. Thanks to mathematical behavior modeling, we predicted they would give up at the third attempt of a sudden price reduction by an unusual amount, for example, by 117 PLN instead of a round thousand. Such 'ugly' numbers force the analysts on the other side to recalculate everything from scratch, which often ends in error and withdrawal from the auction under time pressure.

Analysis of 14 cases of unnatural bid-rigging

In our office on Kilińskiego Street in Łódź, we collected data from 14 different auctions in the construction and service sectors. The common denominator was an attempt to 'push' the market by a player offering a dumping price at the very beginning. In 9 out of 14 cases, the same player increased the rate by a fixed percentage, indicating a lack of internal cost analysis and merely a desire to block the competition. We check 12 behavioral variants before advising a client on a move because we know that such companies often crack just before the deadline.

An example was the auction for the renovation of a school in Zgierz. One of the contractors entered with an offer 23% lower than the market average. Our calculations indicated that at such prices, they couldn't even afford materials meeting ISO standards. It was a classic bluff aimed at discouraging reliable companies from submitting bids. After our analysis, the client decided to stay in the game and wait out the rival's 'attacks'. In the final phase of the auction, when the reality of the cost estimate had to be confirmed, the competitor withdrew, leaving the field open to companies that had reliably priced their work.

Our statistics show that companies using price bluffs lack secured subcontracting in 67% of cases. They count on winning the auction and then negotiating a change in terms with the ordering party. Recognizing this mechanism allows one to avoid entering a destructive price war. Instead of fighting for every cent, it is enough to know that the rival is only pretending to be strong. In one of the projects for a client in the textile industry, this knowledge allowed for maintaining a margin at 11%, while the competition was convinced we were working at the limit of profitability.

How to prepare for the next auction?

The first step is to set emotions aside. At Konsens Logika, we don't believe in intuition; we believe in a spreadsheet. Before every auction, it's worth setting three thresholds: the ideal price, the market price, and a hard 'stop' limit that we won't exceed even by one cent. Most companies make the mistake of setting a limit in their head while the auction is ongoing. This is a straight path to financial disaster. We provide clients with ready-made response scenarios for specific opponent moves, which reduces decision-making time to a minimum.

You should also monitor who else is participating in the proceedings. If you see the same company names every 3 months, we can prepare a profile of their bidding behavior. Some always give up on Fridays after 3:00 PM, others bid aggressively only until the first technical break. These are the details that build victory. Your rival has already calculated their chances, but we have better numbers. In 2024, we already helped 47 clients go through auctions without unnecessary stress and overpaying, which translated to an average of 3,800 PLN in savings on a single smaller order.

Remember that an electronic auction isn't a conversation about quality – it's pure mathematics and game theory. If you want to know if your competitor can really drop the price by another 5%, or if they're just trying to test you, feel free to contact our office in Łódź. We don't promise miracles; we promise precise calculations that show when it's worth fighting and when it's better to let the rival win a contract on which they will likely lose money. Mathematics has no emotions; the one who calculates better wins.

We don't promise miracles; we promise precise calculations that show when it's worth fighting.