Arbeitspapier

Reputation and Mechanism Choice in Procurement Auctions – An Experiment

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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 in 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.

ISBN: 978-3-86788-296-5

Language: Englisch

Bibliographic citation: Series: Ruhr Economic Papers ; No. 254

Classification: Wirtschaft
Auctions
Design of Experiments: Laboratory, Individual
Noncooperative Games

Subject: Buyer-determined and price-based procurement
reputation information
auction choice
experimental economics
Beschaffung
Auktionstheorie
Marktmechanismus
Reputation
Test

Event: Geistige Schöpfung

(who): Brosig, Jeannette
Heinrich, Timo

Event: Veröffentlichung

(who): Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)

(where): Essen

(when): 2011

Handle: http://hdl.handle.net/10419/45906

Last update: 10.03.2025, 11:44 AM CET

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Object type

Arbeitspapier

Associated

Brosig, Jeannette
Heinrich, Timo
Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)

Time of origin

2011

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