The uniform price quality adjusted discount auction for aviation continuation pay : potential benefits to the U.S. Marine Corps

• Main Author: White, Christopher S.
• Other Authors: Gates, William
• Published: Monterey, California. Naval Postgraduate School 2012
• Online Access: http://hdl.handle.net/10945/5412

Approved for public release; distribution is unlimited === This objective of this thesis is to explore the potential benefits realized by the Marine Corps if the current Aviation Continuation Pay (ACP) system is replaced with an auction mechanism that utilizes Quality Adjusted Discount (QUAD) methodology. The Uniform Price Quality Adjusted Discount Auction is designed to reduce the total cost of ACP while simultaneously increasing the overall quality of the aviators being retained. The goal of this study was to evaluate the existing ACP system and through experimentation, coupled with economical analyses, determine the feasibility of replacing the current system of assigning the aviator retention bonus with one that incorporates QUAD methodology. The QUAD auction mechanism caters to a wide range of individual reservation values resulting from various economic conditions. An ACP auction would reflect changing economic conditions, because aviators would reveal their true reservation values when bidding. Although an auction mechanism may not always result in a cost savings, it will ensure that the bonus amounts are set at the correct levels. If a QUAD auction were used in lieu of the current ACP system, Marine Corps manpower planners would have the flexibility to more cost effectively retain higher quality aviators while achieving Marine Corps aviator retention goals.