Effect of information feedback on the outcomes and dynamics of multisourcing multiattribute procurement auctions

Journal of Management Information Systems

Volumn 28, Issue 4, 2012, Pages 199-230

  Adomavicius, Gediminas ^a   Gupta, Alok ^b   Sanyal, Pallab ^c  

^a UNIVERSITY OF MINNESOTA   (United States)

^b UNIVERSITY OF MINNESOTA   (United States)

^c GEORGE MASON UNIVERSITY   (United States)

Author keywords

bidder behavior; experimental economics; information feedback; multiattribute auction; procurement

Indexed keywords

BIDDER BEHAVIOR; EXPERIMENTAL ECONOMICS; INFORMATION FEEDBACK; MULTI-ATTRIBUTE AUCTION; PROCUREMENT;

COSTS; DYNAMICS; INFORMATION TECHNOLOGY; PROFITABILITY; SALES;

COMMERCE;

EID: 84860663693     PISSN: 07421222     EISSN: None     Source Type: Journal    
DOI: 10.2753/MIS0742-1222280408     Document Type: Conference Paper

References (83)

1. Adomavicius, G.; Curley, S.P.; Gupta, A.; and Sanyal, P. Effect of information feedback on bidder behavior in continuous combinatorial auctions. Management Science, 58, 4 (2012), forthcoming.
2. Anton, J.J., and Yao, D.A. Split awards, procurement, and innovation. RAND Journal of Economics, 20, 4 (1989), 528-552.
3. Anton, J.J., and Yao, D.A. Coordination in split award auctions. Quarterly Journal of Economics, 107, 2 (1992), 681-707.
4. Arora, A.; Greenwald, A.; Kannan, K.; and Krishnan, R. Effects of informationrevelation policies under market-structure uncertainty. Management Science, 53, 8 (2007), 1234-1248.
5. Asker, J., and Cantillon, E. Properties of scoring auctions. RAND Journal of Economics, 39, 1 (2008), 69-85.
6. Balzer, W.; Doherty, M.; and O'Connor, R.J.R. Effects of cognitive feedback on performance. Psychological Bulletin, 106, 3 (1989), 410-433.
7. Bakos, Y., and Nault, B. Ownership and investment in electronic networks. Information Systems Research, 8, 4 (1997), 321-341.
8. Banks, J.; Olson, M.; Porter, D.; Rassenti, S.; and Smith, V. Theory, experiment and the Federal Communications Commission spectrum auctions. Journal of Economic Behavior & Organization, 51, 3 (2003), 303-350.
9. Bapna, R.; Goes, P.; Gupta, A.; and Jin, Y. User heterogeneity and its impact on electronic auction market design: An empirical exploration. MIS Quarterly, 28, 1 (2004), 21-43.
10. Beall, S.; Carter, C.; Carter, P.L.; Germer, T.; Hendrick, T.; Jap, S.; Kauffman, L.; Maciejeweski, D.; Monczka, R.; and Peterson, K. The role of reverse auctions in strategic sourcing. Research paper, CAPS Research, Tempe, AZ, 2003.
11. Beil, D.R., and Wein, L.M. An inverse-optimization-based auction mechanism to support a multiattribute RFQ process. Management Science, 49, 11 (2003), 1529-1545.
12. Bichler, M. An experimental analysis of multi-attribute auctions. Decision Support Systems, 29, 3 (2000), 249-268.
13. Bichler, M., and Kalagnanam, J. Configurable offers and winner determination in multiattribute auctions. European Journal of Operational Research, 160, 2 (2005), 380-394.
14. Bichler, M.; Kaukal, M.; and Segev, A. Multi-attribute auctions for electronic procurement. Paper presented at the First IBM IAC Workshop on Internet Based Negotiation Technologies, Yorktown Heights, NY, March 18-19, 1999.
15. Branco, F. The design of multidimensional auctions. RAND Journal of Economics, 28, 1 (1997), 63-81.
16. Brehmer, B. In one word: Not from experience. Acta Psychologica, 45, 2 (1980), 223-241.
17. Brunner, C.; Goeree, J.K.; Holt, C.A.; and Ledyard, J.O. An experimental test of flexible combinatorial spectrum auction formats. American Economic Journal: Microeconomics, 2, 1 (2010), 39-57.
18. Cachon, G.P., and Zhang, F. Procuring fast delivery: Sole sourcing with information asymmetry. Management Science, 52, 6 (2006), 881-896.
19. Carter, C.R.; Kauffman, L.; Beall, S.; Carter, P.L.; Hendrick, T.E.; and Peterson, K.J. Reverse auctions-Grounded theory from the buyer and supplier perspective. Transportation Research, 40, 3 (2004), 229-254.
20. Carter, C.R., and Stevens, C.K. Electronic reverse auction configuration and its impact on buyer price and supplier perceptions of opportunism: A laboratory experiment. Journal of Operations Management, 25, 5 (2007), 1035-1054.
21. Che, Y.K. Design competition through multidimensional auctions. RAND Journal of Economics, 24, 4 (1993), 668-680.
22. Chen, F. Auctioning supply contracts. Management Science, 53, 10 (2007), 1562-1576.
23. Chen, J.; Xu, L.; and Whinston, A. Managing project failure risk through contingent contracts in procurement auctions. Decision Analysis, 7, 1 (2010), 23-39.
24. Chen-Ritzo, C.H.; Harrison, T.P.; Kwasnica, A.M.; and Thomas, D.J. Better, faster, cheaper: An experimental analysis of a multi-attribute reverse auction mechanism with restricted information feedback. Management Science, 51, 12 (2005), 1753-1762.
25. Coppinger, V.M.; Smith, V.L.; and Titus, J.A. Incentives and behavior in English, Dutch and sealed-bid auctions. Economic Inquiry, 18, 1 (1980), 1-22.
26. Cox, J.C.; Smith, V.L.; Walker, J.M. Theory and individual behavior of first-price auctions. Journal of Risk and Uncertainty, 1, 1 (1988), 61-99.
27. Daly, S.P., and Nath, P. Reverse auctions for relationship marketers. Industrial Marketing Management, 34, 2 (2005), 157-166.
28. De Smet, Y. Multi-criteria auctions without full comparability of bids. European Journal of Operational Research, 177, 3 (2007), 1433-1452.
29. Easley, R.F., and Tenerio, R. Jump bidding strategies in Internet auctions. Management Science, 50, 10 (2004), 1407-1419.
30. Elmaghraby, W.J. Supply contract competition and sourcing policies. Manufacturing & Service Operations Management, 2, 4 (2000), 350-371.
31. Elmaghraby, W.J. The effect of asymmetric bidder size on an auction's performance: Are more bidders always better? Management Science, 51, 12 (2005), 1763-1776.
32. Elmaghraby, W.J., Auctions within e-sourcing events. Production Operations Management, 16, 4 (2007), 409-422.
33. Engelbrecht-Wiggans, R., and Katok, E. E-sourcing in procurement: Theory and behavior in reverse auctions with noncompetitive contracts. Management Science, 52, 4 (2006), 581-596.
34. Février, P. He who must not be named. Review of Economic Design, 8, 1 (2003), 99-119.
35. Ganesan, S. Determinants of long-term orientation in buyer-seller relationships. Journal of Marketing, 58, 2 (1994), 1-19.
36. Granados, N.F.; Gupta, A.; and Kauffman, R.J. The impact of IT on market information and transparency: A unified theoretical framework. Journal of the Association for Information Systems, 7, 3 (2006), 148-178.
37. Granados, N.F.; Gupta, A.; and Kauffman, R.J. Information transparency in business-toconsumer markets: Concepts, framework, and research agenda. Information Systems Research, 21, 2 (2010), 207-226.
38. Greenwald, A.; Kannan, K.; and Krishnan, R. On evaluating information revelation policies in procurement auctions: A Markov decision process approach. Information Systems Research, 21, 1 (2010), 15-36.
39. Herbsman, Z.; Chen, W.T.; and Epstein, W.C. Time is money: Innovative contracting methods in highway construction. Journal of Construction Engineering and Management, 121, 3 (1995), 273-281.
40. Holt, C.A. Markets, Games, & Strategic Behavior. Boston: Addison-Wesley, 2007.
41. Isaac, R.M.; Salmon, T.C.; and Zillante, A. A theory of jump bidding in ascending auctions. Journal of Economic Behavior, 62, 1 (2007), 144-164.
42. Jap, S.D. Online reverse auctions: Issues, themes, and prospects for the future. Journal of the Academy of Marketing Science, 30, 4 (2002), 506-525.
43. Jap, S.D. An exploratory study of the introduction of online reverse auctions. Journal of Marketing, 67, 3 (2003), 96-107.
44. Jap, S.D. The impact of online reverse auction design on buyer-supplier relationships. Journal of Marketing, 71, 1 (2007), 146-159.
45. Jeitschko, T.D. Learning in sequential auctions. Southern Economic Journal, 65, 1 (1998), 98-112.
46. Jofre-Bonet, M., and Pesendorfer, M. Bidding behavior in a repeated procurement auction: A summary. European Economic Review, 44, 4-6 (2000), 1006-1020.
47. Kagel, J.H.; Harstad, R.M.; and Levin, D. Information impact and allocation rules in auctions with affiliated private values: A laboratory study. Econometrica, 55, 6 (1987), 1275-1304.
48. Kagel, J.H.; Lien, Y.; and Milgrom, P. Ascending prices and package bidding: A theoretical and experimental analysis. American Economic Journal: Microeconomics, 2, 1 (2010), 160-185.
49. Kasilingam, R.G., and Lee, C.P. Selection of vendors-A mixed-integer programming approach. Computers & Industrial Engineering, 31, 1-2 (1996), 347-350.
50. Kauffman, L., and Carter, C. Deciding on the mode of negotiation: To auction or not to auction electronically. Journal of Supply Chain Management, 40, 2 (2004), 15-26.
51. Keloharju, M.; Nyborg, K.G.; and Rydqvist, K. Strategic behavior and underpricing in uniform price auctions: Evidence from Finnish treasury auctions. Journal of Finance, 9, 4 (2005), 1865-1902.
52. Kleindorfer, P., and Wu, D.J. Integrating long- and short-term contracting via businessto- business exchanges for capital intensive industries. Management Science, 49, 11 (2003), 1597-1615.
53. Koppius, O.R.; Kumar, M.; and van Heck, E. Electronic multidimensional auctions and the role of information feedback. In H.R. Hanse, M. Bichler, and H. Mahrer (eds.), Proceedings of the 8th European Conference on Information Systems, vol. 1. Vienna: Association for Information Systems, 2000.
54. Koppius, O.R., and van Heck, E. Information architecture and electronic market performance in multidimensional auctions. Working paper, Erasmus Research Institute of Management, Erasmus University, Rotterdam, Netherlands, 2003.
55. Kwasnica, A.M.; Ledyard, J.O.; Porter, D.P.; and DeMartini, C. A new and improved design for multiobject iterative auctions. Management Science, 51, 3 (2005), 419-434.
56. Liu, J.; Ding, F.; and Lall, V. Using data envelopment analysis to compare suppliers for supplier selection and performance improvement. Supply Chain Management: An International Journal, 5, 3 (2000), 143-150.
57. Lyytinen, K., and Hirschheim, R. Information systems failures-A survey and classification of the empirical literature. In P. Zorkoczy (ed.), Oxford Surveys in Information Technology, New York: Oxford University Press, 1988, pp. 257-309.
58. Mendelson, H., and Tunca, T.I. Strategic spot trading in supply chains. Management Science, 53, 5 (2007), 742-759.
59. Millet, I.; Parente, D.H.; Fizel, J.L.; and Venkatraman, R.R. Metrics for managing online procurement auctions. Interfaces, 34, 3 (2004), 171-179.
60. Minahan, T.; Howarth, F.; and Vigoroso, M. Making e-sourcing strategic. Research report, Aberdeen Group, Boston, 2002.
61. Monczka, R.M.; Trent, R.J.; and Handfield, R.B. Purchasing and Supply Chain Management, 3d ed. Cincinnati, OH: Thompson/South-Western, 2005.
62. Narasimhan, R.; Talluri, S.; and Mahapatra, S.K. Effective response to RFQs and supplier development: A supplier's perspective. International Journal of Production Economics, 115, 2 (2008), 461-470.
63. Nyborg, K.G.; Rydqvist, K.; and Sundaresan, S.M. Bidder behavior in multiunit auctions: Evidence from Swedish treasury auctions. Journal of Political Economy, 110, 2, (2002), 394-424.
64. Ockenfels, A., and Roth, A.E. Late and multiple bidding in second price Internet auctions: Theory and evidence concerning different rules for ending an auction. Games and Economic Behavior, 55, 2 (2006), 297-320.
65. Parkes, D.C., and Kalagnanam, J. Models for iterative multiattribute procurement auctions. Management Science, 51, 3 (2005), 435-451.
66. Pinker, E.J.; Seidmann, A.; and Vakrat, Y. Managing online auctions: Current business and research issues. Management Science, 49, 11 (2003), 1457-1484.
67. Sandholm, T. Expressive commerce and its application to sourcing: How we conducted $35 billion of generalized combinatorial auctions. AI Magazine, 28, 3 (2007), 45-58.
68. Sandholm, T. Expressiveness in mechanisms and its relation to efficiency: Our experience from $40 billion of combinatorial multiattribute auctions, and recent theory. Paper presented at the 2d International Workshop on Computational Social Choice, Liverpool, UK, September 3-5, 2008.
69. Smart, A., and Harrison, A. Reverse auctions as a support mechanism in flexible supply chains. International Journal of Logistics: Research & Applications, 5, 3 (2002), 275-284.
70. Smeltzer, L.R., and Carr, A.S. Electronic reverse auctions promises, risks and conditions for success. Industrial Marketing Management, 32, 6 (2003), 481-488.
71. Smith, N. Dynamic pricing effects on strategic sourcing and supplier relations. Leaders for Manufacturing thesis, Massachusetts Institute of Technology, Cambridge, 2002.
72. Smith, V.L. Experimental economics: Induced value theory. American Economic Review, 66, 2 (1976), 274-279.
73. Snir, E.M., and Hitt, L.M. Costly bidding in online markets for IT services. Management Science, 49, 11 (2003), 1504-1520.
74. Solinger, J. ARIBA spend management. Paper presented at the Carlson School of Management, University of Minnesota, Twin Cities, 2007.
75. Strecker, S. Information revelation in multi-attribute English auctions: A laboratory study. Decision Support Systems, 49, 3 (2010), 272-280.
76. Teich, J.; Wallenius, H.; and Wallenius, J. Multiple-issue auction and market algorithms for the World Wide Web. Decision Support Systems, 26, 1 (1999), 49-66.
77. Tunca, T.I., and Wu, Q. Multiple sourcing and procurement process selection with bidding events. Management Science, 55, 5 (2009), 763-780.
78. Tunca, T.I., and Zenios, S.A. Supply auctions and relational contracts for procurement. Manufacturing Service and Operations Management, 8, 1 (2006), 43-67.
79. Weber, C.A. A data envelopment analysis approach to measuring vendor performance. Supply Chain Management, 1, 1 (1996), 28-39.
80. Wilson, R. The architecture of power markets. Econometrica, 70, 4 (2002), 1299-1341.
81. Wise, R., and Morrison, D. Beyond the exchange-The future of B2B. Harvard Business Review, 78, 6 (2000), 86-96.
82. Wu, D.J., and Kleindorfer, P. Competitive options, supply contracting and electronic markets. Management Science, 51, 3 (2005), 452-466.
83. Zhu, K. Information transparency of business-to-business electronic markets. Management Science, 50, 5 (2004), 670-685.