You might avoid the winners curse if all contractors meet criteria 1 of your list. It would require all bidding contractors
A) knowing that in this auction, optimal play is bidding actual value
B) All contractors need to be confident all other contractors know this. Because one contractor that doesn't, who underbids, will win the auction but suffer the winners curse.
It should be noted that, in auction theory, even a normal first-price auction should not suffer the winners curse. Because it is still irrational to make a bid that will lead to a loss. As such, maybe auction theory isn't the place to look for a solution to this problem.
1 knows exactly how difficult it will be.
2 charge that cost for how difficult it will be.
3. Maybe avoid having anyone get the winners curse.
So I was wondering if this reverse auction would do that?