TY - JOUR
T1 - Effect of information feedback on the outcomes and dynamics of multisourcing multiattribute procurement auctions
AU - Adomavicius, Gediminas
AU - Gupta, Alok
AU - Sanyal, Pallab
N1 - Copyright:
Copyright 2012 Elsevier B.V., All rights reserved.
PY - 2012/4/1
Y1 - 2012/4/1
N2 - Electronic auctions are increasingly being used to facilitate the procurement of goods and services in organizations. Multiattribute auctions, which allow bids on multiple dimensions of the product and not just price, are information technology-enabled sourcing mechanisms that can increase the efficiency of procurement for configurable goods and services compared to price-only auctions. Given the strategic nature of procurement auctions, the amount of information concerning the buyer's preferences that is disclosed to the suppliers has implications on the profits of the buyer and the suppliers and, consequently, on the long-term relationship between them. This study explores novel feedback schemes for multisourcing multiattribute auctions that require limited exchange of strategic information between the buyer and the suppliers. To study the impact of feedback on the outcomes and dynamics of the auctions, we conduct laboratory experiments wherein we analyze bidder behavior and economic outcomes under three different treatment conditions with different types of information feedback. Our results indicate that, in contrast to winner-take-all multiattribute auctions, multisourcing multiattribute auctions, with potentially multiple winners, allow bidders (i.e., suppliers) to extract more profit when greater transparency in terms of provisional allocations and prices is provided. We develop several insights for mechanism designers toward developing sustainable procurement auctions that efficiently allocate multiple units of an asset with multiple negotiable attributes among multiple suppliers.
AB - Electronic auctions are increasingly being used to facilitate the procurement of goods and services in organizations. Multiattribute auctions, which allow bids on multiple dimensions of the product and not just price, are information technology-enabled sourcing mechanisms that can increase the efficiency of procurement for configurable goods and services compared to price-only auctions. Given the strategic nature of procurement auctions, the amount of information concerning the buyer's preferences that is disclosed to the suppliers has implications on the profits of the buyer and the suppliers and, consequently, on the long-term relationship between them. This study explores novel feedback schemes for multisourcing multiattribute auctions that require limited exchange of strategic information between the buyer and the suppliers. To study the impact of feedback on the outcomes and dynamics of the auctions, we conduct laboratory experiments wherein we analyze bidder behavior and economic outcomes under three different treatment conditions with different types of information feedback. Our results indicate that, in contrast to winner-take-all multiattribute auctions, multisourcing multiattribute auctions, with potentially multiple winners, allow bidders (i.e., suppliers) to extract more profit when greater transparency in terms of provisional allocations and prices is provided. We develop several insights for mechanism designers toward developing sustainable procurement auctions that efficiently allocate multiple units of an asset with multiple negotiable attributes among multiple suppliers.
KW - bidder behavior
KW - experimental economics
KW - information feedback
KW - multiattribute auction
KW - procurement
UR - http://www.scopus.com/inward/record.url?scp=84860663693&partnerID=8YFLogxK
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U2 - 10.2753/MIS0742-1222280408
DO - 10.2753/MIS0742-1222280408
M3 - Article
AN - SCOPUS:84860663693
SN - 0742-1222
VL - 28
SP - 199
EP - 230
JO - Journal of Management Information Systems
JF - Journal of Management Information Systems
IS - 4
ER -