Application of Game Theory to Bidding Price Offer to Construction Projects

Article Abstract: The game theory is a sort of mathematic theory for studying and helping rational persons to find out the ways of how to make proper decisions and maximize their interests in the mutual interdependence circumstance. With the fast development of the construction of infrastructures in China, the game theory has been applied to the bidding of construction projects. This paper presents the analysis of the best bidding price offer strategy for construction projects in the tendering without base price, using the Bayesian Nash equilibrium of the incomplete information static game in the game theory, establishes the profit function mathematic models for the bidders and obtains solution to the models. With reference to a practical example, the paper also provides guidance for the bidding price offer in accordance with the optimal price offer formulae in the game theory. Practice proves that the effect of the application of the theory is satisfactory.