Reputation and mechanism choice in procurement auctions: : an experiment

• Autores: Jeannette Brosig-Koch, Timo Heinrich
• Localización: Production and Operations Management, ISSN-e 1937-5956, Vol. 23, Nº. 2, 2014, págs. 210-220
• Idioma: inglés
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• Resumen

  • We experimentally study the role of reputation in procurement using two common mechanisms: price-based and buyer-determined auctions. While buyers are bound to buy from the lowest bidder in price-based auctions, they can choose between bidders in buyer-determined auctions. Only the latter buyers can consider the reputation of bidders. We find that bidders supply higher quality in buyer-determined auctions leading to higher market efficiencies in these auctions. Accordingly, buyers prefer the buyer-determined auction over the price-based auction, while only half of the bidders do so. A more detailed analysis of buyers' and bidders' behavior and profits provides insights into their mechanism choice.