1990). On the other hand, rule-bound decision making in public procurement denotes the severely restricted decision making freedom and flexibility of bureaucrats and procurement administrators throughout the whole procurement cycle (Rasul & Rogger, 2015).

On the one hand, rules binding bureaucrats to carry out contracting in an open, fair, and competitive manner (e.g. using fully open auctions) are expected to reduce corruption, increase competitiveness, drive prices down, and improve quality. Such positive outcomes are predominantly down to rules forcing bureaucrats to conduct competitive procedures as opposed to corruption-ridden or convenience-driven (i.e. suing the same-old supplier again and again) contracting. Furthermore, highly regulated bureaucratic procedures carry the image of objectivity and fairness which can make politicized bureaucracies to opt for such procedures even though they have considerable costs in terms of value for money (Coviello et al., 2018). On the other hand, discretionary decision making is expected to produce very similar positive outcomes based on the presumption that rigid rules prevent bureaucrats to run contracting efficiently in a manner best suited to the particular circumstances of each tender. Discretion can be used to select the most productive suppliers to bid considerably decreasing transaction costs and room for negotiation with reputable suppliers resulting in better formulated and more enforceable contracts (Chever et al., 2017).

While in the economics literature, contract complexity and completeness are the key characteristics defining whether rule-bound decision making (i.e. auctions) or discretion (i.e. negotiated procedure) produce better results (Bajari et al., 2009). However, it is apparent that neither rules nor discretion are homogenous treatments. There are good and bad rules, hence the impacts crucially depend on matching the right rules to the right tenders and contracts (Parrado, Dahlström & Lapuente, 2018). Moreover, discretion can be used to many ends depending on incentive structures set by organizational management practices and norms, politicization of the bureaucracy, or informal power relations. Unfortunately, with the notable exception of (Rasul & Rogger, 2015) neither of these considerations are taken seriously bringing considerable theoretical opacity to the debate.

# _b) Evidence_

There is a good number of high-quality research papers comparing auctions and negotiated procedures as a proxy for rule-bound versus discretionary decision making in public procurement, some exploiting natural experiments some others explicitly modelling the selection of procedure type to better identify causal links. Unfortunately, only one paper could be identified which opened up the black box of bureaucratic decision making and management in order to address the discretion versus rule dichotomy at its core.

The literature on the effects of using negotiated procedure or auction is divided on their relative merits. For complex products, negotiations appear to produce better outcomes. Exploiting a discontinuity in the rules governing procedure type selection in Italy, negotiated procedures lead to a higher likelihood of the same firm winning repeatedly while projects are delivered faster and larger firms win more often (albeit the latter two effects are present in a smaller neighborhood around the discontinuity) (Coviello et al., 2018). While the number of bidders decrease this does not decrease discounts. Research on social housing construction in Paris, France, come to similar conclusions regarding fewer bidders invited in negotiated and nonformalized procedures, however the authors also find lower prices (Chever & Moore, 2012). While the analyzed construction contracts could be considered as complex, further evidence from France using tendering data on small and simple purchases point at the same direction (Chever et al., 2017). Contrary to these findings, the analysis of German passenger rail line auctions, come to the conclusion that auctions led to 16% more trains for 25% lower prices compared to lines awarded in negotiated procedures (Lalive & Schmutzler, 2011). What drives these differences is unclear unfortunately. Regarding corruption risks, the analysis of an Asian trading firm’s internal records of bribery and data on procurement auction participation suggests that the mandatory implementation of auctions in the public sector led to a significant decrease in bribery, albeit at the cost of allocative efficiency (i.e. less productive firms winning) (Tran, 2008).

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