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Information Disclosure in Dynamic Buyer-Determined Procurement Auctions: An Empirical Study

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  • Stoll, Sebastian
  • Zöttl, Gregor

Abstract

The outcome of non-binding reverse auctions critically depends on how information is distributed during the bidding process. We use data from a large European procurement platform to study the impact of different information structures, specifically the availability of quality information to the bidders, on buyers welfare and platform turnovers. First we show that on the procurement platform considered bidders indeed are aware of their rivals characteristics and the buyers preferences over those non-price characteristics. In a counterfactual analysis we then analyze the reduction of non-price information available to the bidders. As we find, platform turnovers would decrease from around 10 million euros to around 7 million euros and the buyers welfare would increase by the monetary equivalent of around 2.7 million euros.

Suggested Citation

  • Stoll, Sebastian & Zöttl, Gregor, 2012. "Information Disclosure in Dynamic Buyer-Determined Procurement Auctions: An Empirical Study," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62044, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc12:62044
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    References listed on IDEAS

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    1. Gregory Lewis & Patrick Bajari, 2011. "Procurement Contracting With Time Incentives: Theory and Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 126(3), pages 1173-1211.
    2. Dimitris Kostamis & Damian R. Beil & Izak Duenyas, 2009. "Total-Cost Procurement Auctions: Impact of Suppliers' Cost Adjustments on Auction Format Choice," Management Science, INFORMS, vol. 55(12), pages 1985-1999, December.
    3. Leonardo Rezende, 2009. "Biased procurement auctions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 38(1), pages 169-185, January.
    4. Susan Athey & Jonathan Levin, 2001. "Information and Competition in U.S. Forest Service Timber Auctions," Journal of Political Economy, University of Chicago Press, vol. 109(2), pages 375-417, April.
    5. John Asker & Estelle Cantillon, 2008. "Properties of scoring auctions," RAND Journal of Economics, RAND Corporation, vol. 39(1), pages 69-85.
    6. John Asker & Estelle Cantillon, 2010. "Procurement when price and quality matter," RAND Journal of Economics, RAND Corporation, vol. 41(1), pages 1-34.
    7. Domenico Colucci & Nicola Doni & Vincenzo Valori, 2011. "Information Disclosure in Procurement Auctions with Horizontally Differentiated Suppliers," Working Papers - Mathematical Economics 2011-02, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    8. Ching-Hua Chen-Ritzo & Terry P. Harrison & Anthony M. Kwasnica & Douglas J. Thomas, 2005. "Better, Faster, Cheaper: An Experimental Analysis of a Multiattribute Reverse Auction Mechanism with Restricted Information Feedback," Management Science, INFORMS, vol. 51(12), pages 1753-1762, December.
    9. Doni, Nicola & Menicucci, Domenico, 2010. "A note on information revelation in procurement auctions," Economics Letters, Elsevier, vol. 108(3), pages 307-310, September.
    10. Richard Engelbrecht-Wiggans & Ernan Haruvy & Elena Katok, 2007. "A Comparison of Buyer-Determined and Price-Based Multiattribute Mechanisms," Marketing Science, INFORMS, vol. 26(5), pages 629-641, 09-10.
    11. Esther Gal-Or & Mordechai Gal-Or & Anthony Dukes, 2007. "Optimal information revelation in procurement schemes," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 400-418, June.
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    Cited by:

    1. Yili Hong & Chong (Alex) Wang & Paul A. Pavlou, 2016. "Comparing Open and Sealed Bid Auctions: Evidence from Online Labor Markets," Information Systems Research, INFORMS, vol. 27(1), pages 49-69, March.

    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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