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Reputation and mechanism choice in procurement auctions : an experiment
Citation Link: https://doi.org/10.15480/882.4662
Publikationstyp
Journal Article
Date Issued
2012-08-17
Sprache
English
Author(s)
TORE-DOI
TORE-URI
Volume
23
Issue
2
Start Page
210
End Page
220
Citation
Production and Operations Management 23 (2): 210-220 (2014-02)
Publisher DOI
Scopus ID
Publisher
Wiley-Blackwell
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. © 2012 Production and Operations Management Society.
Subjects
auction choice
buyer-determined and price-based procurement
experimental economics
supplier reputation
DDC Class
330: Wirtschaft
Publication version
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