Information transparency in business-to-business auction markets: The role of winner identity disclosure

Yixin Lu, Alok Gupta, Wolfgang Ketter, Eric Van Heck

Research output: Contribution to journalArticle

Abstract

One of the central issues in auction design is how much information should be disclosed to bidders. In this paper, we examine bidder’s identity disclosure in sequential business-to-business (B2B) auctions. Specifically, we compare two information disclosure policies, one that publicly discloses winners’ identities (the status quo) and an alternative policy that conceals winners’ identities. Using a large-scale field experiment in the Dutch flower auction market, we find that concealing winners’ identities can significantly increase the average winning price and thereby raise the seller’s revenue. We further explore the underlying mechanism that drives the observed effect. The empirical analysis of bidding behavior in these auctions suggests that bidders tend to imitate some of their competitors who have won in previous rounds of auctions and shade their bids accordingly. Concealing winners’ identities can disrupt such imitation heuristic, which in turn mitigates the price-declining trend in sequential rounds. Our findings have important implications for the design of information disclosure policies in B2B auction markets.

Original languageEnglish (US)
Pages (from-to)4261-4279
Number of pages19
JournalManagement Science
Volume65
Issue number9
DOIs
StatePublished - Jan 1 2019

Fingerprint

Information transparency
Disclosure
Auction market
Business to business
Auctions
Information disclosure
Disclosure policy
Bid
Revenue
Auction design
Competitors
Dutch auction
Bidding behavior
Business-to-business (B2B)
Status quo
Seller
Imitation
Field experiment
Empirical analysis
Heuristics

Keywords

  • Auction design
  • Bidding heuristics
  • Field experiment
  • Identity disclosure
  • Information transparency
  • Sequential auctions
  • Tacit collusion

Cite this

Information transparency in business-to-business auction markets : The role of winner identity disclosure. / Lu, Yixin; Gupta, Alok; Ketter, Wolfgang; Van Heck, Eric.

In: Management Science, Vol. 65, No. 9, 01.01.2019, p. 4261-4279.

Research output: Contribution to journalArticle

Lu, Yixin ; Gupta, Alok ; Ketter, Wolfgang ; Van Heck, Eric. / Information transparency in business-to-business auction markets : The role of winner identity disclosure. In: Management Science. 2019 ; Vol. 65, No. 9. pp. 4261-4279.
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